Household morale calculated by INSEE rebounded in June. The French believe that their future financial outlook has returned to normal. So far, their income has been relatively unaffected by the crisis.

The confidence of the French has not caught up to its level at the beginning of the year, then close to the high of the decade, but it has improved markedly with the deconfinement.

The French are, it seems, much less pessimistic than the government, business leaders and most economists. The future will tell who is right. Household morale, calculated each month by INSEE, climbed 4 points in June and is now at 97 points, a stone’s throw from its long-term average (100). As if the crisis had not taken place and the future was looking bright, or almost. While the confidence of the French has not caught up to its level at the beginning of the year, then close to the highest of the decade, but it has improved markedly with the deconfinement.

Household incomes have rather held up

In detail, the proportion of households believing that it is opportune to make major purchases has increased markedly and is even at its long-term average. Likewise, the French are almost as optimistic about their future personal financial situation as in a normal period, the balance of opinion of households having also come closer to its long-term average.

How to explain this optimism? First, with the partial activity mechanism put in place by the government, the support fund for the self-employed and other measures, household income has fallen much less than economic activity. For many French people, the crisis has not yet really had an economic effect. Moreover, the current and future savings capacity of the French surveyed by INSEE improved in June.

Fears of rising unemployment

Does this mean that this relative confidence will translate into increased consumption in the coming months? Possible, especially in the third trimester. But there is a pitfall to be avoided for this rebound to be sustainable: the job market. Unemployment fears have skyrocketed since lockdown began. These even reached the peak of June 2013, without however reaching the historic level of spring 2009.

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Julien Manceaux, economist at ING, expects the unemployment rate to rise to 10.5% early next year. “More and more temporary workers will find employment, in particular thanks to the deconfinement of the tourism and hotel sector, but they will be partly replaced in the ranks of unemployment by the temporary unemployed who will be victims of bankruptcy of their company ”, he explains. For him it will be difficult “To remove all their doubts from consumers who could, once the holidays have passed and with them the euphoria of regained freedom of movement, return to more cautious savings and consumption behavior after the summer”. This is one of the challenges of the government’s future stimulus plan.

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