UK Consumer Economy At 30-year Low

That’s the headline, that the UK consumer economy is at a 30-year low.

UK consumer economy at 30-year low, says Sainsbury’s chief executive

That’s not what was actually said nor is it what anyone really means.

Mr King, who joined Sainsbury in 2004 after stints at Marks & Spencer, Asda and Mars, said: “I have been doing groceries for 28 years. It’s the toughest it has ever been for consumers.”

Even that is nonsense in most senses.

For of course consumers in the UK are vastly richer than they were 30 years ago. The portion of incomes spent on food has roughly halved for example over that time span.

What is true is that consumer incomes are showing their greatest sustained falls for 30 years, yes. Which is what  supermarket group is interested in for it is the growth or shrinking of such incomes which will, to a large part, determine the growth or shrinkage of their own businesses.

This is the usual confusion between absolute levels and rates of change. In absolute terms the UK consumer is one of the richest human beings to ever walk the face of the planet. Hugely, vastly, rich by any historical or even current global standard. In comparison with last year, or the year before, the UK consumer is a little bit poorer: the recession might have taken general living standards back to about 2004, maybe 2005.

Humans, being humans, tend to judge things by comparison with recent experience, not by absolute standards. So while consumers feel poor and act as if they are, they’re simply not.

Originally published in Forbes