Why does the economy grow and families do not notice it?

Despite the positive change in the macroeconomic conditions we have been going through for months, it is still common to find an acquaintance to tell us, “well, what do you want me to say, I have not heard yet that we are doing better, as they say”. This is certified by the CIS barometer of June 2015, when a question of “how do you think your family’s economic situation will be within a year”, 64% say it will be the same or worse. Pessimism reigns – certainly less than a year ago –
but it is still pessimism, perhaps today more tinged with skepticism. In a way, the referent is still the period of the boom and although it has been repeated that this situation will not return, the state of mind that can be pressed “on the street” is low. This is evidenced by the European Consumption Observatory of Cetelem 2015, where the interviewee is invited to say what their financial situation is compared to five years ago. 66% say it has worsened and 64% say it buys less.
On the other side of the barrier, in the statistics, we find an economy (GDP) rising at an annualized quarterly rate of 4%, private consumption that goes at the same speed and retail sales that rose 4.1% per year. This week we knew that car sales grew 23% in August, we see that there is positive movement in the real estate sector, that consumer credit grew by 16% year-on-year in the first half of the year … What’s happening? Do people deceive interviewers? Are the statistics bad? It does not seem that neither one nor the other is what is happening –

there are too many indicators on both sides that certify it

rather everything points to the explanation of this contradiction happen because there is still a segment of the population that is in a situation very bad, while many of those who are better and even spend more, still are not aware of it. On the other hand, there are people who fortunately have not lived through the crisis, because they have been able to keep more or less their income, but they put the brakes on their consumption for a reason of caution and now they start to recover the lost ground, something that especially it is perceived in nonperishable consumer goods, those that had suffered a postponement in their purchase, read appliances, furniture, cars …
This would be roughly the first explanation, but the issue is complex and admits many nuances.
For example, for Gerard Costa, Esade’s Marketing professor, there is a trust problem that is still very important. “It’s like in the couple, it’s hard to lose trust, but when it’s lost, it’s much harder to recover.” He says that only thinking in these terms and the profound damage -very internalized- that has caused the Great Crisis in many layers of the population, can be understood that Spain presents the biggest differences in Europe between economic reality and personal expectations. “In the first case, we are as in Germany and in the other as in Portugal …”, he continues. Well, let’s say that some families spend more, but still without confidence.
Insists Antonio Vilar, Professor of Economics at the Pablo Olavide University of Seville and fellow of the OECD. “There is a certain inertia in the perception of reality, but what seems certain is that consumption is growing asymmetrically, the middle and upper classes are pushing a lot and have a very significant weight in the population.” These are the segments of the population that most cut their spending when the crisis began and are now consuming what they postponed because they have money. Explain that this inertia in the perception of reality appears in all aspects of life. and sets the example of healing. “In Spain, we have the longest life expectancy and, on the other hand, there is a perception of our own health that is not very good, and in Greece, where hope is lower, they feel healthier than anyone,” she says. Certainly, the psychological aspect plays a decisive role.
“Many people still have their mental chip in ‘savings’ mode, and over the years we have changed consumer habits a lot. I can affirm that in basic products the recovery has been spectacular in the big distribution. 1.7%, which is very high in the field of non-durable goods, partly due to the fact that during the year we experienced a deflation in the large consumption, the manufacturer’s brands have been in constant supply, while the brands As a distributor, they have always been cheaper, but I would dare to say that people spend more, although they do not always perceive it, “says Asís González de Castejón, director for Nielsen distribution studies.
Another point of view is provided by Oriol Aspachs, director of Macroeconomics of the Strategic Planning and Studies Area of La Caixa, “we should not be surprised at all that the perception of recovery appears with a certain delay.” Let’s remember what happened with the recession, also It took a while to recognize it and change habits. ” In addition, he adds, that people today are still uncertain, since the last time they were told that they were better, after a short time the economy fell into recession because of the Greek debt. “Although analysts say that the situation is going better, people think twice before accepting it,” he continues. And it raises a very important aspect. “The situation is better because we focus the analysis on growth rates, but it is not ‘much better’ since we should not forget that in absolute values we are still at levels that are below those that existed before the crisis.” Admit that the sources of uncertainty have changed. “Years ago they were internal, about the growth of our economy, now we no longer have so many doubts about our own, but the fear comes from outside – call it China or Greece – and the possible repercussion that the problems may have here”.

Anyway, there are a number of real aspects that should be emphasized.

For example, since 2010, Spanish families have de-indebted in a figure close to 140,000 million euros, representing 14% of GDP. The financial costs of family indebtedness have also fallen substantially, especially in those relating to mortgages. And there is a slight change of personal approach. For Professor Costa, “people start to indulge at home, although they are very reluctant to pay for food, for example, there are 50% of families willing to save on electricity and gas and 20% to rethink he lowers his leisure expenses. ”
In short, who and how does consumption drive? According to the latest report by BBVA on the situation of consumption in Spain in the first half of 2015, it is “the middle classes and the well-off households that are responsible, while the spending of the least favored -which during the crisis declined less in relative terms – continues to fall, which has led to a certain rebound in the inequality of the distribution of spending “. With regard to the products that show the greatest momentum, it is stated that “durable goods lead spending growth since mid-2013”. In this sense, Professor Vilar is sharp. “In the consumption of durable goods, the less favored change an object when it breaks or when it can not pull more, whereas the better-off change it when a new model comes out.” If the drop in spending was accelerated by the classes medium and high, the recovery also comes for them “.
According to the latest Global Survey of Consumer Confidence, prepared by Nielsen consultancy (May-June 2015), “the confidence of the Spanish as a driving force for consumption again grew in the second quarter of 2015, confirming the good expectations the first three months of the year. In this way, the consumer confidence index gained nine points in the first half of this year, going from 63 to 72 points. There are four points of rising between January and March and another five between April and June, which accelerates the growth rate of confidence as the year progresses. This figure, also, brings Spain closer to the European average, standing at 79 points. ” This vision is very close to what the real indicators indicate. But perhaps the point that unbalances the balance between perception and reality, in favor of indicators, is the growth that consumer credit registers to families.
It has already grown by 8.25% in 2014 and continues this year.

According to estimates in Cetelem, with data from the Bank of Spain in hand

“the improvement in employment and a higher disposable income of Spaniards make it improve by 16% the credit for consumption granted, which reaches 9,142 million euros in the first six months of 2015 “. In addition, financing grows in all consumer segments. In the case of automobile credit, the growth was almost 30% in the first quarter. The advance of credit for new cars (+ 31.34%) is much greater than for the second-hand vehicle (+ 20%). In the case of credit for the purchase of consumer goods, for example, large appliances, the increase is 5.67%, reaching 838 million euros. The personal loan, on the other hand, grows 66.6%, according to data from ASNEF- I hope this works. However, it is good to keep track of the references and remember that in 2007, Spaniards were asking for financial liquidity for a value three times higher than what was requested this year.

The City Council allocates funding for "priority" investments of Logroño for 12 million this semester

Image result for logrono city council


The City Council of Logroño has planned financing lines for an approximate amount of 27 million euros and already allocated for this first semester 12 of them to investments that has been considered “priority” for the logroñeses.

This was stated Monday by the mayor of Logroño, Cuca Gamarra, who presented this morning the economic-financial forecast of the Government Team to address the prioritized investments for the first half of this financial year 2018.

Having secured this financing is possible, as the mayor has said, “thanks to the economic solvency of our City Council that has ended its accounts with surplus in the last six years and the progressive reduction of debt we have achieved since we are at the head of the Government Municipal”.

Gamarra has supported the “good economic and financial health” of the City of Logroño “in the good management we have done since 2011, a responsible and transparent management of an administration that provides the best services, taking into account the balanced balance of income and expenses and the economic situation in which we find ourselves “.

Those 27 million to finance investments come from the loan that will be subscribed for 7.5 million euros; around 6 million euros from the disposals of municipal properties; 0.8 million of general resources; and 3.2 million of the surplus of the previous year.

To this, he said, “we must add 9.3 million euros to pay the annuity of the burial, which will be financed by loan and part of the surplus of 2017.”

The 12 million now allocated are distributed as follows: 7.5 million loans (which will be tendered this week); 872,245 euros of disposals; 246,965 of general resources and 3.2 million of surpluses.


Image result for vara de reyIn the detail of the projects, those related to the burial and urban transformation that has led to continue being ahead in terms of amount and its priority for the city.

There are therefore several items in the economic-financial table released this morning by the mayor. Among them, one of 350,000 euros, for the beginning of the work of the Nudo de Vara de Rey, which has also been the subject of an important announcement.

Gamarra has referred to the approval by the Extraordinary Government Board, last Friday, of the agreement with the Logroño Integration of the Railway Company for the bidding of these works.

An execution that will begin in summer, following Alternative “C” chosen with high political consensus, and that have a global amount of 1,347,000 euros. “It is the project that will complete the first phase of the burial works, the main work of Logroño for decades that will change the urban appearance of an entire city,” he said.

In order to promote the administrative processing of this project, funding is already foreseen for 350,000 euros (with a subsidy of 100,000 euros from the Regional Government) with disposals of municipal assets.

Also phase II of the remodeling of Vélez de Guevara (96,845 euros) and the contract for the conservation of public roads (525,400 euros) have been included in this chapter.

Another of the projects linked to the burial, the new bus station, is the most important of those destined to be financed by the 7.5 million loan that the government team plans to subscribe immediately.

There will be 1,364,447 euros and 1,500,000 for its equipment, “which will be a fundamental boost for this infrastructure that, together with the train station, will be the axis of transport in our city.”

To aid rehabilitation – one of the most dynamic economic policies are printing, in addition to contributing to the improvement of our heritage – will be available 2,260,000 euros of credit.

Thus, 300,000 are destined to the Casa del Cuento (300,000 euros + 200,000 to be consigned on account of the disposals); 250,000 for the remodeling of One Hundred Stores; 200,000 to reinforcement of pavements; 200,000 for the redevelopment of streets in Villanueva (the mayor recalled at this point that they will be able to count on funds from the DUSI strategy recently granted).

To this we add 400,000 for development cooperation; € 141.853 for the remodeling of Albia de Castro; 322,763 to new technologies; 190,000 for a crematorium (counting with 90,000 more disposals); 140,000 euros for improvements in schools (to which 150,000 will be added by the regional government); 115,000 for the cover of Las Norias; and 16,500 (out of a total of 40,000) for the improvement of markets.

In general resources, there are two works whose financing will be supplemented by the State in charge of the 1.5% Cultural program: the integral reform of the Stone Bridge, for which there are 134,000 euros (plus another 200,000 subsidy) and for the extension of the Camino de Santiago, 112,000 euros (plus 168,000 grant).

Finally, “thanks to the good economic management of the City Council that generated a surplus last year”, new remodeling of streets will be able to be financed – Phase II of Múgica- (671,000 euros); the Valdegastea toy library (540,000 euros), a firefighters autoscale (1,000,000 euros), leaving funds for other actions that are established as priorities.

In this sense, the mayor recalled that the total surplus achieved in 2017 and consigned in the Budget Liquidation, was 8.4 million.

Of them, the 3.2 that will be destined to financially sustainable investments; and the rest, 5.2 million that -as Gamarra has pointed out- will reduce debt in two ways: on the one hand, to reduce the loan that must be requested for the annuity of the burial; or for the cancellation of ordinary loans.