The future gets a bad press, and it’s not hard to see why.

In a few months the UK leaves the European Union with a cliff-edge departure looking more likely by the day. A trade war between the world’s economic superpowers is looming as more advanced economies pivot towards populism. We have just experienced one of the hottest summers on record, which while fun for BBQs and pool parties is a frightening example of the impact of climate change on the planet.

However, these challenges – while very real – are only part of the story. We also live in an age of falling global poverty and rising education. An age where more people are living longer lives in good health, accompanied by higher levels of wellbeing and unprecedented access to leisure. Given the enormous progress these indicators represent, are the challenges of tomorrow really worse than the challenges of yesterday?

Consumers don’t think so. Although some are susceptible to the sepia tinged narratives about a better yesterday, most remain optimistic about the future and rational about progress. The world has its challenges, but whatever the outcome of the Brexit negotiations, Trump’s next twitterstorm or the Bank of England’s next announcement on interest rates, it isn’t going to hell in a handcart.

Optimism is a critical component of this outlook. The ability to shrug off the negativity isn’t just a coping tool for getting through the day – it’s something that conditions wider behaviour like spending, trust and choice.

We have been measuring consumer optimism in the UK since January and despite a tumultuous year optimism has only dipped into negative territory (below 50 on our index) once. Our monthly research includes not just the economic facets of optimism but also broader aspects, such as social trust, personal autonomy, security and identity that are vital but often overlooked components of consumer outlook. This makes it an excellent predictive tool of behaviour, rather than one which merely describes shifts that have already occurred.

Source: Trajectory Optimism Index, 2018

The Index also reveals some fascinating patterns to optimism and how it varies from group to group. Optimism is strongest amongst those who voted to leave the EU in 2016 and amongst those who intend to vote Conservative at the next election. Those who are more optimistic are also more likely to greet new technologies positively, more trusting of media and businesses and more likely to feel they have control over the way their life turns out.

Most intriguingly, optimism can also be a predictor of spending changes. The most optimistic consumers are less likely to expect to pare back their spending in the coming months and are more likely to increase spending in discretionary areas that other consumers have already earmarked for savings. The less optimistic people are, the higher the chances that they will reduce spending in all categories – from everyday items to treats, trips, subscriptions and big ticket items.

We live in interesting times that provide us with no shortage of pessimistic outlooks on both the present and the future. Understanding optimism holds the keys to understanding consumer resilience in the face of such challenges and as such is not just a useful indicator, but an indispensable one.

The Optimism Index and Signal

We’ll be releasing the headlines of The Optimism Index from September onwards. The full report will be available – alongside other articles, presentations, reports and data – to subscribers of Signal, which launches on 27th September.

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