Consumers are jobless and concerned ... but satisfied?
Aubyn Hill, Financial Gleaner Columnist
While the recent Gleaner-Bill Johnson opinion polls have recorded a broad midterm hammering of the Portia Simpson Miller administration's performance as economic and social managers of the country, the most recent Don Anderson poll has recorded similar sentiments, but also throws up an anomaly.
Pollster Anderson found that consumer confidence has been ticking downwards since the beginning of this year.
In the first quarter of 2014, consumer confidence was recorded at 104.7; in the second quarter, it was 100.8; and Anderson's latest poll findings, which were released at the Jamaica Chamber of Commerce/Jamaica Conference Board briefing last week, stated that consumer confidence had dropped to 97.8.
Consumers had a long complaint list which included rising taxes, rising prices, depreciation of the Jamaican dollar, eroding or stagnant salaries, and scarce job opportunities.
They felt that "the gains thus far are quite small" from the International Monetary Fund (IMF)-induced and painful economic strictures.
The anomaly, which the Anderson poll disclosed, is that many consumers are satisfied with their living standards. A couple of factors may be at play here.
First, the constant flow of inward foreign-currency remittances, which has recorded an uptick year-over-year, has served to cushion the economic pain that many ordinary consumers are feeling.
THE RISK WITH REMITTANCES
There is a risk here, however. Many Jamaicans are being weaned on to a dependence of foreign remittances that could have the same effect over time, as government handouts and subsidies have had in the past, and especially before the current IMF programme.
If some problem occurs in the economies of the remitting countries that slow down significantly, or stop the remittances flow, while the IMF four-year facility is in place, Jamaicans could face destitution. Our only real hope is to grow our own economy swiftly.
The second reason for the stated level of satisfaction by consumer could simply be that they do not want to heap more pain on the administration. They may have chosen to suck it up rather than be seen as complainers in a hard time. Many persons may demur from citing personal discontent.
Don Anderson's poll assessments found business persons to be fairly sanguine about our economic position even while business confidence was not robust.
Indeed, the third quarter's result at 112.1 was just slightly below the second quarter's 112.8 result.
However, the third-quarter 2014 result was substantially up on the 84.1 figure recorded a year earlier.
Business persons, according to the Jamaica Chamber-commissioned poll, appear to understand that in the case of our fiscal affairs, Dr Peter Phillips and his government had no choice but to come to an agreement with the IMF. We had run out of lenders - we couldn't get any more money to borrow without the IMF's imprimatur on a tough fiscal consolidation programme.
Many businesses and their owners who profited and benefited from past governments' economic profligacy had to now face the difficult facts of Jamaican life under IMF rules.
They are adjusting to the new reality and voicing support because they know there is no other game in town.
Many consumers, on the other hand, have no economic or social safety net beneath them, nor do they have the economic infrastructure and resources to support them as do many businesses that are members of the Jamaica Chamber.
Consumers have used up whatever little savings they had, maxed out the limits on their credit cards and cannot pay their bills necessary for living, or their taxes. Their confidence is shot.
MORE BITTER MEDICINE
Dr Phillips is in the uncomfortable position of having to administer more bitter medicine even as his party staggers under the political beating in the latest poll results.
The continuation of the process to meet IMF targets means that the finance minister has had to cut back significantly on capital and recurrent expenditures by about $7.7 billion below budget.
Those cuts have pushed the all-important primary surplus under the IMF programme 16 per cent above the target to $27.79 billion.
The really bad news in the Fiscal Policy Paper (FPP) tabled in Parliament earlier this week by Dr Phillips indicates that revenue collections - taxes - and grants are running 2.1 per cent behind target as of July this year.
The long drought and the outbreak of the chikungunya virus will have further negative effects on production and collection of taxes.
This shortfall means that the Government will have to institute further painful cuts in its expenditures. There will be much less money circulating in the economy and that could lead to further job cuts.
Peter Phillips has stated that his government has made it publicly clear that adjustments under the IMF programme would be painful.
To many Jamaicans, that is a discomforting truism.
Minister Phillips has said that the People's National Party administration will not back down from the IMF-guided adjustment programme.
We will see how long consumers remain satisfied with the ever-increasing economic and social pressures resulting from the relentlessly difficult IMF and government adjustment programme.
Aubyn Hill is CEO of Corporate Strategies Ltd and chairman of the opposition leader's Economic Advisory Council.