The most recent Survey of Consumers conducted by Thomson Reuters/University of Michigan shows consumer confidence for the present to be increasing, while future expectations are flat. Until consumers receive clarity regarding increased taxes and government spending cuts, they are likely to remain cautious regarding their spending. Sunovis Financial helps small businesses with lending needs and guidance, and examines consumer confidence – an important element for small business.
San Francisco, California (PRWEB) October 26, 2012
The Thomson Reuters/University of Michigan Surveys of Consumers indicated improved consumer confidence, which can be attributed to the increasingly favorable perception of consumers financial situation at present. In general, consumers mention a decrease in their outstanding debt, rather than an increase in their disposable income, as the reason for their improved outlook.
Unfortunately, this confidence seems to be limited to the present, as consumer confidence for the upcoming 12 months remained negative. The majority of consumers expect no wage gain, as well as decreased inflation adjusted income over the coming year. In addition, half are reporting that their financial situation is worse than it was in 2007, and half envision no improvement in the coming 5 years. Sunovis Financial works with small businesses on a daily basis, and encounters the same opinions as found in the survey.
Large purchase plans among consumers were mixed in August. A combination of record low interest rates and deep price discounts improved consumer purchase plans, especially among those with total household incomes under $75,000. These lower income households are more likely to purchase large durable goods now than at any time in the past 5 years. Conversely, those with higher household incomes are less likely to make large purchases, which marks a drop off from the peak levels recorded in 2010 and 2011.
When considering overall economic growth, consumers have had no change in their assessment of the overall economy. A majority of American consumers feel that the economy will remain unfavorable through the beginning of 2013. When considering economic expansion, only slightly over 30% feel that the economy will experience an expansion over the coming 5 years. Consumer sentiment regarding economic policies remained constant, with no change in the negative sentiment regarding these policies.
The Consumer Sentiment Index was 74.3, an improvement over the 72.3 reading from July, and a vast improvement in the year over year reading of 55.8 recorded in August 2011. The large gains versus last year are reflective of the recovery from the lows experienced during last year’s debt ceiling uncertainties. The Consumer Expectations Index fell by 0.5 points to 65.1 in August, which is the lowest reading since the beginning of 2012 and shows the uncertainty in the consumer sector. In direct contrast, the Current Conditions Index rose from 82.7 in July to 88.7 in August, which is the highest reading since the beginning of 2012. Obviously, the consumer is confident now, but harbors great uncertainty about the future.
Richard Curtin, the Survey of Consumers chief economist, said that despite the August gain, confidence has been in a holding pattern during the past few months. He relays that aside from the past few years, the average level of consumer confidence in 2012 was lower than in any other year since 1982.
Much of the current uncertainty may be linked to the upcoming elections, with consumers in a holding pattern until they understand which parties fiscal policy will prevail. Small business surveys have upheld this view, with 20% of small business owners citing lack of sales as their primary problem. They have also expressed their concerns regarding the uncertainty present in the U.S. pending the results of this year’s Presidential elections.
About the Survey of Consumers:
The Survey of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by telephone. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for Current and Expectations Index the minimum is 6.0 points.
About Sunovis Financial:
Sunovis Financial helps small businesses and borrowers find and attain the best loans today nationwide to help stabilize and grow their businesses.
For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2012/10/prweb9952429.htm
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