In December, household confidence in the economic situation, calculated by INSEE, rebounded sharply to return to its September level in France. This increase remains fragile, however, because it is closely linked to the health situation.
It is now a well-established mechanism in France. The rapid progression of Covid-19 cases is forcing the government to confine the population. Household depression follows. When the epidemic subsides and health restrictions are lifted, at least in part, the French regain their morale.
This is what happened last spring and what was confirmed at the end of 2020. In December, household confidence in the economic situation, calculated each month by INSEE, rebounded sharply. The indicator gained 6 points compared to November and returned to its September level, the institute said on Wednesday morning. At 95 points, it certainly remains below its long-term average, which stands at 100. But this INSEE survey has several positive aspects.
First of all, the proportion of households who believe it is a good time to make major purchases has risen sharply in the last month. It is even above its long-term average for the first time since February 2020, that is to say since the start of the pandemic.
The evolution of consumption, the great unknown of 2021 for the French economy
Households are also less pessimistic about their future financial situation. Then, the share of those who consider that the standard of living in France will improve over the next twelve months has climbed, whereas it had fallen during the previous two months.
A still fragile rebound
All is not rosy, of course. Thus, if the fears of the French vis-à-vis unemployment regressed at the end of last year, they remain particularly high. Above all, the morale of the French, like economic activity, will remain dependent on the health situation for many months. The rise in December therefore appears to be cyclical, like a mechanical rebound. As such, it is still very fragile.
It is the evolution of the pandemic in France that will condition the recovery in 2021. For Crédit Agricole economists, “Household consumption should experience a more gradual rebound in 2021 than in the third quarter of 2020”. It was not until the second semester, hoping for better control of the health situation, that “Using part of the savings accumulated during confinement would gradually return to pre-crisis consumption levels”, they say.
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