Confidence: the magic word
COVID-19 is back with a vengeance after having seemingly been on the wane. As we enter the third year of the pandemic, the economy has moved up and down with the changing levels of people’s confidence to move about to go to work, shop for needs and wants, or engage in recreation or travel. These, after all, are people’s daily activities that keep the economy humming by creating demand for goods and services, to which producers respond with job- and income-creating production activities in farms, factories, or service firms.
Two sources of data can show us the ups and downs in people’s confidence since the pandemic started in March 2020, all the way to the present, when confidence has again taken a beating with the latest COVID-19 surge. The first is the combination of the Business Expectations Survey and Consumer Expectations Survey undertaken by the Bangko Sentral ng Pilipinas (BSP) every quarter. The second is the Google Mobility Index, an interesting set of data that technology giant Google compiles from information it is able to track online, given its ubiquitous presence in practically all netizens’ daily lives. Google reports that seven of its products each have over one billion users, including Gmail (email), Chrome (internet browser), Maps (mapping and navigation), Search (search engine), and YouTube (video sharing).
Google can track the movements of its products’ users daily on a real-time basis. The massive data their global system generates allowed them to produce the COVID-19 Community Mobility Reports, showing changes in peoples’ movements through the pandemic. They can count daily visitors to specific types of location (e.g., the workplace, grocery and pharmacy stores, train stations, retail and recreational establishments, parks, and home), compared to a pre-pandemic baseline. What story do the data tell?
The BSP data reveal that as of the first quarter (Q1) of 2020, business and consumer sentiment actually expected better prospects for the second quarter, especially after the dampening effects of the Taal Volcano eruption in January. How wrong they were, of course, and as the country went on full quarantine, the BSP was not even able to take the surveys in Q2. By Q3, net business sentiment had sunk to -5.3 (meaning the percentage of pessimists exceeded that of optimists by that much), while consumer sentiment dived drastically to -54.5. Business sentiment rebounded to +10.6 and +17.4 in the next two quarters into Q1-2021, but by Q2-2021, fell anew to +1.4 and further to -5.6 in Q3, even worse than the year before. Meanwhile, consumer sentiment stayed depressed in the double-digit negatives, although it steadily improved to peak at -19.3 in Q3-2021. But last quarter, business sentiment bounced back steeply to +39.7, reflecting the bustling Christmas mood we all witnessed. Even so, consumer sentiment had actually dropped anew to -24.0, likely dampened by the suffering brought by Supertyphoon “Odette” to millions in Visayas and Northern Mindanao. And with the new records we are seeing in our COVID numbers, a significant downturn this first quarter is all but certain.
Google’s mobility index told a similar story. By April 15, 2020, at the quarantines’ peak, people’s visits to retail and recreation establishments were way down (-81 percent) from the pre-pandemic baseline. It was -71.4 percent for workplaces as people worked from home, with similar drastic declines for transit stations (-84.9 percent), grocery and pharmacy stores (-60.4), and parks (-50.1). Mobility inched upwards after that, with another dip in August 2020, then a minor peak around Christmas 2020 (but a still very negative -24.4 percent for retail and recreation). New dips were seen in April and August of 2021, but by last Christmas, retail and recreation activity was already 17.3 percent over the pre-pandemic baseline. As of Jan. 6, however, it had dived again to -11.3 percent.
The story is still unfolding, and it’s anybody’s guess what’s in store. What’s needed, to the extent we can manage it, are moves that will restore people’s confidence—and it’s not just up to the government, but something we all have to collectively work on.
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