Professor Richard Curtin, head of the Survey Research Centre, University of Michigan. - Ricardo Makyn/Staff Photographer

Consumer confidence slipped sharply during this year's second quarter, while the optimism businesses felt at the prospect of a change of government ahead of last September's general election continued to erode, the latest conference board surveys show.

In fact, not since the second quarter of 2006, when the business confidence index tumbled to 96.0, have firms been as bearish as they are now - with the index at 103.1, down 14.1 points from the first quarter.

"Business firms were less optimistic about the future economic prospects in the latest survey than at any time in the past two years," said University of Michigan's Professor Richard Curtin, who coordinates the surveys for the Conference Board, an arm of the Jamaica Chamber of Commerce.

But it is not only corporate Jamaica that has turned sour in the face of high oil and food prices and ratcheting inflation.

Consumer confidence down

Consumers, who feel the pinch in their pockets and have seen relatively few of the jobs they expected to come with the ascendancy of the Jamaica Labour Party (JLP) to government, have grown pessimistic, particularly in the island's tourism belt.

Nationally, the consumer confidence index tumbled 15.7 points, to 126.7 against the first quarter's 142.4, but in tourist areas the index tumbled a precipitous 38 points.

"On balance, the data indicate that Jamaicans anticipate a weak tourist season due to a weaker United States economy, as well as a global economic slowdown, persistently high energy prices, lower remittances and increased domestic inflation," Curtin wrote in his analysis. "While the current level of confidence remains reasonable high and supportive of slow growth, the data indicate a growing vulnerability that could reverse these gains in the future."

Bruce Golding's Jamaica Labour Party (JLP) won the election, ending the 18-year rule of the People's National Party (PNP) on the back of promises of robust growth and job creation, driven by business-friendly policies and good economic management.

With the election looming, the business confidence index in the third quarter of last year was a high 134.2. Firms also felt good about their existing situation. The index of current business conditions was 152.0, marginally down from the 154.9 of the previous corner.

Corporate leaders now mostly display bearish snarls, concerned about the economy and conditions for investment.

"Most of the pessimism among business firms was driven by uncertainties in two areas: future economic trends and future public policies," according to the survey report.

"Economic uncertainties primarily involve future trends inflation and tourism, unsettled financial markets and the shifting impact of the global economy on domestic conditions. Policy uncer-tainties involved the perception that the pace of change in government policies has been too slow to effectively improve economic prospects. As a result firms are likely to take more prudent actions given their cautious economic outlook, and thus act to slow the pace of economic growth in the Jamaican economy."

Projected growth

Finance Minister Audley Shaw has projected growth over the medium term of around three per cent, but, as the confidence survey has confirmed, there have been questions about whether this will be achieved.

Half of all firms expect the economy to worsen over the next year, the highest proportion with such a negative outlook since the final quarter of 2005.

On the consumer side, perceptions were less dire, but the trend was clear: heading south. For instance, their assessment of cur-rent confidence was only slightly lower this quarter versus the last, but grew severe when asked about the future.

Survey respondents said their job prospects had weakened slightly in the second quarter against the first. But look towards the future and a deeper pessimism set in.

"In the second quarter of 2008, 47 per cent expected the decline in the availability of new jobs," said Curtin. "This was more than twice the 20 per cent low recorded in the third quarter of last year. While at the weakest level recorded during the past two years, future job pros-pects still remain above the levels recorded from 2001 to 2005."

john.myers@gleanerjm.com