Consumers and Consumer Confidence
The results of a consumer sentiment study don’t actually affect our decisions as consumers, although we are the ones who create the results. This month, the results were higher than they’ve been since 2008. That means that most U.S. consumers feel that the job market is slowly getting stronger and that the economy has improved in the last year. They are starting to consider big purchases, like houses and cars. Of course, that could turn around at any time.
As consumers like us become more confident about our income and our economic future, we are more comfortable buying new things, whether that means a new mini-van or just a new pair of shoes. The extra money we spend in turn fuels the economy as companies get stronger. This consumption accounts for the vast majority of the GDP.
But how does this affect the individual consumers? It doesn’t, directly. It is meant as a way to measure them, not to impact them. However, there is a cycle and everyone gets influenced in the end. For example, if consumer confidence is high then people are more likely to buy stuff and so retailers and manufacturers will be stronger and their employees will be more financially secure. And since those employees are also consumers, their financial security will mean higher consumer confidence which hopefully will come full circle again to give them more financial stability.
Of course, the impact this cycle has on you as an individual consumer is a very personalized question. If you are a life-saving heart surgeon, chances are good that people will seek out your services no matter what they expect from next year’s income. So will you tend to save or spend?
What are the factors that make you feel more confident as a consumer and influence your decisions to spend money? What kind of things do you spend on when you are feeling more or less confident? Do you agree with the findings of the most recent consumer sentiment survey?
We look forward to hearing what our own consumers think!