The age of uncertainty

22 November 2016 | Markets and Economy


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Leo Schulz: 'The age of uncertainty.' Economists are increasingly interested in the way we feel. Surveys that follow business and consumer confidence are closely watched. My name is Leo Schulz, and I have with me Alexis Gray, an economist in the Investment Strategy Group at Vanguard Europe. Alexis, what is it that we're looking at here?

Alexis Gray: Well Leo, at the bottom is a dark blue line representing consumer confidence. The second line at the top, this sort of green line, represents the number of times that people are searching on Google for 'recession.'

Leo Schulz: What stands out to me, Alexis, is that prior to 2008, that line is relatively smooth and subdued, and then after 2008 right into the present, that is quite a jerky line, isn't it; why do you think that is?

Alexis Gray: Well, I think that's right. Leading up to the global financial crisis, if you think back to those times, the global economy was doing pretty well. And then of course you have this big financial crisis, recession, and so anxiety levels go up. People Google the word 'recession', and since then I think that that line, that number of 'recession' searches has been more elevated than pre-crisis.

Leo Schulz: People feel a recession because they're struggling, their incomes aren't going up, and their jobs are not very secure. Do you think that that feeling of uncertainty in people's lives is reflected in those lines?

Alexis Gray: I definitely think there's a relationship between the fact that for years now we've had a heightened level of anxiety and low confidence, and that may be part of the reason why people voted for Brexit, because you know in many ways the Leave vote was a vote for 'I'm unhappy with the way that things are'.

Leo Schulz: But even in the US, whatever you might think of Donald Trump, he's a very distinct change isn't he, from the mainstream politicians. So there's a feeling for change, isn't there?

Alexis Gray: Yeah, I think there is. I think what's happened with Brexit and with Donald Trump, there are similar flavours going on there, which is a feeling that people are unhappy with the political establishment and unhappy with the way that the government has run the economy that perhaps they've been left behind.

Leo Schulz: Since the financial crisis, we have been more anxious as a society; Brexit has added to our sense of anxiety, to our sense of uncertainty; where will it end? Time will tell. Alexis Gray, thank you very much.

Alexis Gray: Thanks, Leo.

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