Private consumption figures signal turning point in economic recovery

Experts optimistic in light of biggest rise since 2009

A number of economists are indicating that the figures for private consumption in Denmark are much more positive than has previously been thought, Børsen reports. Calculations by the national statistics office, Danmarks Statistik, for the newspaper sought to separate some misleading factors in order to arrive at more realistic figures.

The purchase of energy and cars was taken out of the equation, giving an increase in private consumption of 1.1 percent over the first half of 2014, instead of 0.3 percent, as had previously been calculated. The corrected figures reveal the highest level of consumption since the third quarter of 2009.

Extremely significant
Lars Olsen, an economist at Danske Bank, explained to Børsen that this was extremely significant. “It might not sound like an enormous difference, but it is actually the difference between just an okay and a strong development in private consumption,” he said.

“The purified figures point to an annual growth in private consumption of about two percent, and that’s clearly above the norm. It is also a growth that fits in quite well with the good progress households have in their disposable income, and with the very high consumer confidence.”

Misleading figures
Børsen writes that economists have wondered for several months why consumer confidence had been increasing, while private consumption remained relatively flat. This new analysis could suggests that the figures previously used were misleading.

Frederik I Pedersen, a chief analyst at the economic council of the labour movement AE-Rådet, said that these figures give a more realistic picture. “In other words, we get a picture that’s more in accordance with the normal driving factors in the economy,” he said.

Could be a turning point
Peter Bojsen Jakobsen, a macroeconomist at Sydbank, suggested that this could be a turning point. “The corrected figures for private consumption are definitely positive because private consumption has been the Danish economy’s Achilles heel since the financial crisis struck,” he explained.

“If private consumption continues at this rate, there should be no more doubt that it makes sense to talk about a recovery in the Danish economy.”