Three cheers for the Dutch economy

The outlook for the global economy is more uncertain than usual due to the volatile performance of the new American president. Almost daily he announces import tariffs and in the talks on peace in Ukraine he insults his allies. I may not dislike Trump as much as many others, but now he is starting to talk a lot of nonsense, even for me. That is a great pity, because in my opinion he also has enough good ideas. Think of reducing the regulatory burden and bureaucracy, the emphasis on economic growth, an energy policy that in my opinion is more realistic than that of his predecessor and than ours, etc. You wonder when this whirlwind will calm down and also what influence it has on the American economy or on ours in the meantime.

I don't know whether Trump's actions have a direct impact on the mood of the Dutch, but consumer confidence in our country fell for the fifth month in a row in February. A disappointing figure. The CBS index fell from -28 in January to -32, the lowest level since November 2023. The index is also well below the long-term average. On its website, CBS refers to the average of the past twenty years. That is -10. Since 1990, the long-term average is -5. Consumers' answers to all five sub-questions on which the index is based became more negative. The hope for somewhat higher economic growth this year is based on the expectation that consumers will increase their own spending somewhat more due to the increase in purchasing power last year and this year. In that case, it would be nice if confidence improved. Incidentally, consumer confidence in Belgium actually improved in February. Perhaps that has something to do with politics. In our country, the national political situation is often chaotic and fragile, while in Belgium, a new federal government took office at the beginning of February, led by Bart de Wever, some eight months after the elections. Quite smooth for the complex political relationships in our southern neighbours.

Three cheers for the Dutch economy
Hurray-1! The number of building permits for new homes is increasing. In 2024, more than 67.000 permits were issued, compared to around 55.000 in 2023. The distribution of owner-occupied and rental homes was about 33.000/2024. With around 25 permits for the construction of rental homes, the highest number in ten years was reached. The total number of permits issued in XNUMX is approximately the average of the past XNUMX years. But our ambition is much higher. The figures suggest that we are on the right track, but that there is still a long way to go. You can choose what you want to emphasize.

Hurray-2! According to figures from Statistics Netherlands, investments in fixed assets rose by almost 10% in December compared to December 2023. Before you start euphoric, it should be said right away that the increase was mainly in trucks, vans, passenger cars and aircraft and that this is mainly due to tax changes as of 1 January 2025 and changing rules around environmental zones in some cities. The purchase of vans in particular has simply been brought forward. We must assume that the figures for the first months of 2025 will show a setback.

Hurray-3! Unemployment in our country rose slightly in January for the first time in five months: 3,8% compared to 3,7% in the previous months. Of course, that does not deserve a 'hooray', but the increase was caused by more people reporting to the labour market. Employment also increased. We have a large number of inactive people in our country, who are not counted as part of the labour force until they do start looking for work. If this trend continues, the tension on the labour market will decrease and our national productive capacity will increase.

US homebuilders less positive
Confidence among American homebuilders fell again in February. The National Association of Home Builders' confidence index came in at 42, down from 47 in January. The chart shows that confidence is not high anyway. This has everything to do with the capital market interest rate. The uncertainty and volatility of Trump's policy are also making players on the financial markets uncertain. The minutes of the last Fed meeting show that central bankers are worried about inflation and the impact of import duties on inflation. They are certainly not going to lower interest rates in the short term.

Closing
The whirlwind that is Donald Trump just keeps raging. Isn't he getting tired of it himself?

The Dutch consumer is becoming increasingly gloomy, while purchasing power has actually increased. Isn't that consumer also getting tired of that gloom?

Then there are three cheers for the Dutch economy this week. Small cheers, that is. The number of building permits for new homes is increasing. However, a further substantial increase is needed to realise the national construction ambitions. Furthermore, investments in tangible fixed assets increased significantly in December. Unfortunately, we must expect a setback in the coming months because the increase was mainly driven by companies bringing forward the purchase of vehicles. But: once in, once in. After all, the number of people reporting to the labour market is increasing. I think that is really good news!

Hans de Jong

Han de Jong is a former chief economist at ABN Amro and now a resident economist at BNR Nieuwsradio, among others. His comments can also be found on Crystalcleareconomics.nl

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