20.06.22 Analytics

Crisis Euphoria

Russians’ economic optimism hit record highs in May

Michael Komin
Editor of Re: Russia

Economic optimism is at an all-time high among the Russian population despite sanctions and the economy contracting. The percentage of “economic optimists” rose to 34–35% in April and May 2022, overtaking the number of “economic pessimists” for the first time on record. According to data from FOM, the average number of optimists was 24% through 2020 and 2021. Surveys from The Levada Center confirm the trend; The Index of Crisis Expectations, compiled by Re:Russia based on the center’s own data, shows that the proportion of respondents who fear delays, salary cuts, layoffs and price increases has fallen from 42 points in March to 35 points in May. 

The rise in optimism and decline in the amount of people expecting a crisis can be explained by the improvement of major macroeconomic indicators, such as the exchange rate of the dollar and inflation rates. As these indicators return to their pre-March values after a very noticeable slump, the Russian population’s reaction is to deem this process a “miracle of the defeated dragon”. Even at the peak of frenzied consumer spending and bank runs, sociologist’s data showed that the level of long-term indicators of economic well-being were relatively normal. This indicates that the population has adapted to short-term macroeconomic shocks.  

Russians’ economic optimism seems to be largely based on a widespread mobilising effect, namely the growth of support for the regime and positive outlook on the country’s future (known as the “rally around the flag” effect). It’s also based on the assumption that the crisis was short-lived and its fallout limited. However, economists predict a second, deeper wave of the crisis in the third and fourth quarters. This may test the population’s economic optimism and lower the Index of Economic Well-being by the beginning of autumn.

Data from sociological surveys helps to understand how the population assesses the current economic situation and what changes it expects in the future. These expectations influence economic behaviour, namely savings, credit, and consumer confidence. The central bank uses data compiled monthly by the Public Opinion Foundation (FOM) for its economic models and macro forecasts. Data goes back to April 2014.  

The survey was conducted using a three-stage stratified sample of households, using the face-to-face method. It represents the entire population of Russia older than 18 years. The main purpose of the study was to monitor inflation expectations in the public. These consist of price change estimates for different categories of goods over the last month and expectations regarding price changes in the near future. The data compliments the results of Rosstat’s consumer price index.  

In addition to basic inflation indicators, the central bank also measures general indicators of economic optimism in the population, based on various surveys. People who categorise their family’s financial prospects, the country’s economic situation and living standards over the next year as “positive” are called “optimists”. Those who respond negatively to the same questions are categorised as “pessimists” and those with mixed answers are considered “neutral”. 

Respondents were grouped on the basis of the following questions: 1) In your opinion, how will your family’s financial situation change in the next 12 months: improve, remain unchanged or worsen? 2) In terms of economic conditions in the country as a whole, do you think the next 12 months will be a good time or a bad time for the economy? 3) In your opinion, which of the aforementioned will apply to the country’s level of production in the next year? 4) In your opinion, which of the aforementioned will apply to the country’s standard of living in the next year? 

With the exception of the last two months, Russian society tended to consist of "economic pessimists" as opposed to "economic optimists" during the entire surveyed time. The group of neutral respondents usually hovered around 40%, shrinking only during crises.

The first wave of the current crisis, which occurred as a result of the invasion of Ukraine, had practically no effect on the ratio of optimists and pessimists among those surveyed by FOM (see Fig. 1). In January 2022, 26% of respondents were optimists and 32% pessimists. The ratio changed slightly in March (22% and 35% respectively), even though negative consumer expectations were actually at their highest level. This can be seen in the monitoring results of FOM, as well as through indirect evidence such as data from SberIndex, which shows a sudden burst in spending on food and other products around this time. This points to the prevalence of panic spending among the population, when people were trying to stock up for an uncertain future. Consequent statistical data confirmed this.

According to the data provided by FOM, there was a sharp increase in optimism among the population in April and May. The percent of those who were able to give a positive assessment of economic prospects of their family and the country as a whole reached 34–35% (levels not seen since January 2020). The number of people who answered neutrally dropped to 36–37%, and pessimists made up 28–30% of those surveyed. This means that in April the number of optimists overtook the number of pessimists for the first time ever.  

Figure 1. Economic optimism in population groups, 2020–2022, % of the number of respondents

Polls conducted by the Levada Center confirm FOM’s results that Russians are becoming more and more positive about the socio-economic situation in the country. The Levada Center’s own regular Social Sentiment Index, which consists of a distributed average of answers to a number of questions related to a respondent's attitude towards their family’s future, the country’s prospects, trust in state institutions, etc. reached record high levels of 92 points in May 2022. 

These values are correlated with the political situation to some extent, which means that the final results are influenced by Russians’ improved attitudes towards the decisions the government is making and the overall direction in which the country is heading. However, the sub-indexes of expectations and family, included in the final score, also demonstrate a positive upward dynamic (+7 points in each category). It should be noted, however, that the Consumer Sentiment Index, which reflects the population’s attitude towards the economical situation, is largely negative: in April it dropped to 70 points, or 4 points less than before the start of the invasion in February.  

Data from the Levada Center helps form another index, called the Index of Crisis Expectations, which joins the indexes of social and consumer sentiments to paint the bigger picture. It reflects how much respondents fear losing income and work because of the ongoing crisis. The index integrates answers from four questions asked by the Levada Center in March and May (a face-to-face survey conducted in people’s homes, representative of the whole nation). The questions were as follows:

  • Taking into account you and your family members living in the same household, are you currently expecting delays in receiving your wage?

  • Taking into account you and your family members living in the same household, are you expecting to take a pay cut? 

  • Taking into account you and your family members living in the same household, are you expecting staff cuts and layoffs? 

  • How do you think prices for basic consumer goods and services will change in the next one to two months?

The number of pessimists or people expecting to be faced with a reduction in income, being laid off or for prices to rise stood at 42% in March 2022. The same number identified as optimists. In May the number of optimists rose to 50%, while only 35% could be categorised as pessimists. These trends are consistent across all of the components (questions) of the index (see Fig. 2). This means that people expecting a pay cut in March stood at 31%, and in May this figure fell to just 23%. The same patterns could be observed in regards to the risk of being laid off. The greatest concern among respondents was on the issue of rising prices, although the number of pessimists fell from 66% in March to 59% in May, and the number of optimists rose from 30% to 37%. 

Figure 2. Crisis expectations index: the population's assessment of the risks of reduced income, layoffs and rising prices in March and May 2022, % of the number of respondents


The tendency for economic optimism to grow and for fears to subside remains stable across all key socio-demographic groups. Figure 3 shows the distribution of optimists and pessimists on the issues of wage cuts or delays. The largest reduction in pessimists and increase in optimists occurred among young people (ages 18–24 and 25–39). March recorded the largest proportion of pessimists among 18–24 year olds compared to all other age groups, and the rate stood at 38%. The largest increase in optimism (13%) was observed amongst Russians who had recently managed to break out of poverty and had enough money for food and clothing, but could only buy durable consumer goods by taking out a credit. 

Figure 3. Index of crisis expectations (questions about wage cuts and delays) by socio-demographic groups and the dominant source of information, % of the number of respondents


The growth of economic optimism in May 2022, as seen in the data of FOM and the Levada Center, can be interpreted in two ways.

On the one hand, as foreign policy crises evolve, respondents tend to demonstrate opinions closely associated with the “rally-round-the-flag” phenomena. Re:Russia previously reported on such short-term increases of loyalty to the government’s decisions in the report “An Imposed Consensus: What Do Polls Reveal about Domestic Support for the War and Can They Be Trusted?”. Indicators regarding support and attitudes towards issues such as the general state of the country increase during geopolitical events: for example, during the annexation of Crimea in 2014, Russians’ positive outlook on the state of affairs rose to by 18 p.p between January and March. In 2022, after the invasion of Ukraine, the same indicators shot up by 19 p.p. between January and April. It is useful to remember that questions relating to personal economic prospects, including the risk of being laid off or being subject to salary cuts, should be less prone to the aforementioned effect. General questions related to the country’s state of affairs are more susceptible to change, but data shows that optimism has increased among all indicators, including the Index of Crisis Expectations.  

On the other hand, the surge in economic optimism indicators is also linked to how the population perceives sanctions and the subsequent crisis they provoked. During the initial wave of sanctions, when the dollar surged and Western companies announced they were leaving the Russian market, a significant part of the population panicked. They withdrew bank deposits and panic-shopped, stocking up on necessities. It soon became evident that sanctions would not lead to an immediate shock effect. In fact, the roll-out would be gradual, with companies preferring to suspend their activities but respect agreements regarding the transfer of assets and preserve their labour force. 

Even the banking system did not collapse. In response, the exchange rate began to grow. Between the end of March and the beginning of April, people were mostly concerned with inflation, but even that began to slow down in May. This meant that a large number of those polled by FOM and the Levada Center were under the impression that Russia had already come out of the crisis, swiftly and easily, and against all odds. This apparent “miracle” of a rapid recovery from the crisis could have explained the rise in economic optimism.      

Various economic research centers have warned that sanctions and import restrictions are likely to have a delayed effect. The second wave of the crisis will start in the third or fourth quarters and will be much deeper. If this does indeed happen, the population’s economic optimism may turn out to be short-lived and give way to a wave of pessimism in the beginning of autumn.