On Thursday, the Riksbank is expected to make another decision on an unchanged policy rate.
That, in combination with increased real wages and slowed mortgage interest rates, seems to have affected the Swedes’ faith in the future – and quickly.
A third believe in a better economy
According to the Institute of Economic Research latest report the so-called confidence indicator – which measures households’ optimism about the economy – increased by 7.5 units between December and January.
It is the biggest increase since the measurements started in 1996.
– It is primarily the forward-looking expectations that are increasing. There are hopes that things will be better in 12 months compared to now, says Fredrik Johansson Tormod, head of unit.
A third believe in a better economy within a year, compared to just under a quarter in December.
From low levels
It is not entirely unusual for optimism to soar during gloomy times. A similar increase occurred during the financial crisis.
– It must be remembered that the increase takes place from low levels. There is still a long way to go to a normal level in the mood, says Fredrik Johansson Tormod.
Arturo Arques, private economist at Swedbank, is not surprised. Even before Christmas shopping, a certain optimism was visible among Swedish consumers, according to Swedbank’s own measurements.
– There are several explanations. Inflation is on the way down and with a high probability we are in an interest rate peak. The fact that food prices do not increase as quickly is of course also pleasing to many, he says.
The recession deepens
But it is still too early to say hello, he says.
– It is not a cloudless sky, on the contrary. There are several ongoing conflicts that risk escalating, and there are also geopolitical challenges. We also see that the number of people in debt is increasing. Many are obviously having a very tough time.
The recession is predicted to remain and even deepen in 2024. For example, unemployment is expected to peak at 8.5 percent by the end of the year. During 2025, however, the economy is expected to improve again.