Consumer optimism increases, slightly on The Murfreesboro Post

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Consumer optimism increases, slightly

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Posted: Thursday, September 17, 2009 1:57 pm

Consumers have become more hopeful. However, the question is whether or not they will begin to increase their spending, or keep a tight grip on their wallets.

Confidence among Middle Tennessee consumers has improved during the summer months, continuing its rebound that began earlier this year. The overall confidence index rose to 142 from 113 in May. This gain was due almost entirely to consumers’ more upbeat expectations for the future economy.

However, it is not clear how much of this increase in consumer confidence is due to perceived changes in fundamentals of the economy, or to merely thinking, “It cannot get much worse, so it has to get better.”

Perceptions of the current economy have become only slightly less negative, and consumers have actually become less likely to believe that now is a good time to make large
purchases.

The current poll of 450 randomly selected adult residents of Davidson, Rutherford and Williamson counties was conducted the evenings of Monday, Sept. 14 and Wednesday,
Sept. 16.

The current situation index is still negative, indicating that consumers recognize that the current economy is still in bad shape. However, the slight increase in the current
situation index to -107 from -118 in May suggests a positive shift in sentiment.

Fears about further losses in the job market are having an excessive drag upon consumers’ optimism regarding the future of the economy. Most local consumers still have concerns about the job market and many are fearful about future contractions in the job market. Well over half of local consumers (58 percent) say that jobs in Middle Tennessee are “hard to find.”

A key question for local retailers is whether or not this rise in consumer confidence during the summer will translate into increased spending by consumers.

Unfortunately, negative views of the current economy, fears about the current job market and future contractions in the job market, and concerns about personal finances suggest
that many local consumers are still keeping a tight grip on their wallets. The significant positive shift in consumers’ optimism toward the future of the economy might be due less to changes in the fundamentals of the economy, and more to consumers thinking, “It cannot get much worse, so it has to get better.”

Such thinking is not overly compelling when it comes to getting consumers to open up their wallets and spend hard earned money. As such, retailers might still have to wait a number of months before increases in consumer confidence will lead to dramatic increases in consumer spending.

Local retailers and businesses should not be overly exuberant about recent increases in consumer confidence. There could still be some tough times ahead. Even if some
consumers who managed to weather the economic storm from 2008 increase their spending, many consumers are still concerned about the economy, the job market, and their
personal financial situation. These consumers are instead taking a cautious approach and opting to save in the event of even more economic tough times ahead. As such, the
recent increases in consumer confidence over the past few months do not necessarily mean that we will see sharp increases in consumer spending in the immediate future.

Tagged under Economy, MT poll

Member Opinions:

By: UnionLady1055 on 9/19/09
I cannot spend anymore. It is ALREADY spent. With unemployment up, I wonder where this paper is coming from and WHO you called? It wasn't Murfreesboro residents! We can hardly wait till the TAX REASSESSMENTS!