03.10.22 Review

Paradoxes of Adjustment: long-term economic expectations worsen, but lowered expectations make assessments of current income and economic situation more positive


Consumer sentiment and economic assessments of the Russians surveyed show that they are adjusting to the current situation. At the same time, long-term expectations of the country's economic development prospects are worsening. The poorer groups are more severely affected by the crisis. But the reduced expectations about improving one's well-being lead to a more optimistic assessment of the current financial situation.

According to data from the "Levada Center", the perception of the economic situation among Russians has become stable. Estimates of the current well-being of one's own family, which showed an increase in the spring, remained unchanged throughout the summer months. The perception of unemployment has also stabilized. In the short-term, i.e., in the next six months to a year, the forecast of the dynamics of personal well-being in the respondent's assessments looks quite positive, which is also confirmed by other surveys, for example, data from the Public Opinion Foundation. When asked if the respondents are satisfied with their lives, almost half of those polled by the "Levada Center" (44%) still answered affirmatively. The optimistic perception of the current economic situation can be explained by the expectations of a severe and deep recession that did not come true. 

However, at the end of summer, a negative trend emerged in the dynamics of expectations in the long term (three to five years in the future). According to the Public Opinion Foundation, in March, 49% of respondents gave an optimistic forecast for changes in living standards in the country. Still, by August, this figure had decreased to 42%. The same trend appears in the "Levada-Center" data: here, the number of those believing that the next five years will be a good time for the Russian economy has dropped from 30% in April-June to 24% in August. The excessive spring optimism gradually decreases, giving way to more sober assessments.

The ability to adjust to the crisis varies by groups with different levels of wealth. According to the "Levada Center", in the most vulnerable groups with low wealth, a significant drop in the number of those willing to find new sources of income is noticeable. Compared to late 2020, the proportion of such respondents decreased by 18 percent among the poorest and 13 percent among those who earn enough to buy clothes and food. During the same period, the proportion of those who "did not manage to adapt to life" increased significantly. 

At the same time, in groups with medium and high incomes, some respondents demonstrate a downward adaptation attitude (accepting the deterioration of their financial position). In contrast, others declare they have been able to take advantage of the opportunities that have opened up. Among the wealthiest, the percentage of people "living as before" has also decreased but still constitutes a relative majority (43%).

Changes in the subjective perceptions of Russians of the minimal and sufficient levels of income are also evidence of adjustment to the crisis. In 2021, respondents estimated the average per capita family income at 18.6 thousand rubles, the minimum required revenue — at 24.6 thousand, and "normal" - at 46.6 thousand. In 2022, assessments of personal income increased by 3.7 thousand rubles (to 22.3 thousand), while estimates of the minimum required revenue increased by 2.3 thousand and "normal" — by 2.9 thousand, indicating a decrease in ambitions to achieve a certain level of well-being. "The shrinking distance between subjective estimates of income and real cash receipts indicates an adaptive line of behavior that has become stronger during the crisis periods of recent years — if we consider the previous phase of the military conflict with Ukraine and the West in 2014-2015, the announcement of pension reform in 2018, the pandemic and the ongoing military operation," writes Stepan Goncharov, the "Levada Center" expert.

The process of adjustment "aligns" the minimal level of material claims between consumer groups: respondents with different incomes begin to estimate their required level of income similarly. Finally, this comparison makes it possible to identify the proportion of Russians who estimate their income above the subjective minimum. In August 2022, their share was 30%, which is five percentage points higher than last year; as a result, the downward trend of this group, observed since 2018, has reversed, even though real income during this period decreased. However, this reduction was compensated by an adaptive decrease in expectations.