After months of speculation and uncertainty around the global economy, it appears the penny has finally dropped for the world's consumers. Consumer confidence worldwide has fallen to its lowest level in several years, according to the Nielsen Global Consumer Confidence Index, the definitive gauge of consumer sentiment around economic and social concerns across 511 countries. The latest Nielsen Consumer Confidence Index has plunged to 88 -- down six points in the last six months -- the largest single drop the Index has recorded in the last three years.

Consumer confidence fell in 39 out of 48 countries in the past six months, with New Zealand, the United States and Latvia suffering the deepest declines. Among the 39 markets recording a decline in consumer confidence, 15 fell by double-digits.

"The last six months have been the most turbulent period for the global economy in several decades. When the U.S.A. sneezed at the outset of the sub-prime disaster nearly a year ago, the rest of the world quickly caught a cold. No region or country has been spared the domino effect of the U.S. sub-prime and credit crisis," observed David Parma, global head of Customized Research, The Nielsen Company.

"Consumers around the world are struggling with the same global issues that are impacting their daily lives. It's an unfortunate pendulum. On the one hand, we are seeing soaring global oil prices, rising commodity prices, which are impacting grocery prices, rising interest rates and increasing inflation. This is happening in tandem with falling property prices, weakening labor markets, decreasing industrial output levels and growing unemployment rates which have all resulted in less spending power for the average person. Overall, it's not a good picture," commented Parma.

Across the regions, the U.S. suffered the biggest fall in confidence, dropping a hefty 17 points, while in Europe, the Nielsen Consumer Confidence Index dropped six points to 83. The Index fell three points in Asia Pacific and EEMEA, and two points in Latin America.

Hard times ahead for New Zealand, the United States and Japan
Consumers in three of the world's most developed economies -- the United States, Japan and New Zealand -- have taken a serious turn in the last few months. Not surprisingly, consumer confidence has fared badly in the United States, the world's largest economy, and epicenter of the sub-prime housing and credit crises. Consumer confidence in the U.S. plummeted 17 points in the last six months, a drop second only in magnitude to New Zealand's.

"With high gas prices, falling property values, food inflation and other economic pressures, it's not a surprise that the economy is a top concern for many Americans," said Parma. "Manufacturers and retailers take note -- because clearly, value for money is more important than ever."

The majority of United States consumers have a bleak view of the economy. Sixty-six percent of U.S. respondents have a pessimistic view of their local job prospects over the next 12 months, with 50 percent saying they're not so good, and 16 percent calling them downright bad. Only 3 percent of United States consumers consider their job prospects excellent.

In the last 12 months, consumer confidence in Japan, the world's second-largest economy, has plunged 19 points and Japanese consumers are not expecting things to improve anytime soon. In April, as the survey was being conducted, Japan's unemployment rate hit a seven-month high, following a spate of layoffs in the construction sector, and the effect of the U.S. sub-prime crisis on Japanese exports were beginning to trickle down to consumers' hip pockets. In modern-day Japan, there also exists a general concern about the sustainability of the economy in the face of social factors.

The most remarkable drop in confidence came from New Zealand, which plunged a staggering 18 points in the last six months. Despite a reasonably buoyant economy, a strong labor market and low levels of unemployment, consumer confidence has dropped to its lowest level in a decade mainly due to interest rates, which have skyrocketed to 8.25 percent -- one of the highest in the developed world. Over half (53%) of New Zealanders indicate that a rise in interest rates would be their major concern in the event of a downturn in their local economy. Inflation, too, is a factor: food prices in New Zealand have risen 1.8 percent since December 2007, and transport costs for the same period have risen 0.8 percent.

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