A consumer paradox?

Prosperity in figures – as we are well aware – does not always reflect a prosperous population. Often, the positive image created by basic economic indicators does not match the image of the real standard of living of most citizens. In Greece at the moment, we appear to be experiencing the opposite of this – while economic data does not appear very positive, there is prosperity among citizens, or at least among that proportion of citizens whose performance creates the impression of a more general prosperity. The statistics, published in last Sunday’s Kathimerini, are revealing. At a time when the government’s restatement of the public financial situation is subverting the positive image of the economy that resulted from the creative accounting of Costas Simitis’s successive governments, a series of statistics reveal a stable – and in some cases impressive – rise in retail demand. Telling examples of this can be seen in the increase in turnover at large department stores, the robust sales of new passenger cars, and even the expert assessments that there will be no significant drop in house prices after the Olympic Games. All this evidence suggests prosperity and trust in the future of our economy – something which is scarcely compatible with the concern provoked by fiscal data and by predictions of a slowdown in the rate of growth. If this contradiction is genuine, then the private sector is doing a great deal better than the recorded tax revenue and disposable income figures. If, on the other hand, the contradiction is false, then the only conclusion we can draw is that a section of the population spends all their disposable income before borrowing massively in order to sustain the level of prosperity they have achieved. Guesses at the extent of tax evasion in Greece could back the first, more positive scenario. However, the uneven distribution of income, the increase in applications for consumer loans, and the stagnation of bank deposits support the second, more pessimistic scenario. And if the reality is indeed closer to the latter scenario, the consequences could be very grim, for a large number of households but also for the economy in general. In order to enable effective economy planning, the matter should be studied in depth and the necessary measures should be taken. An increase in retail sales is often seen as the driving force of development. In this case, a speedy diagnosis is necessary to ensure it does not turn out to be the opposite.