more-arw search

Retailers Can Account For Strong Consumer Confidence Using Corporate Budgeting Software

Rising Confidence

New York-based research group The Conference Board said that its Consumer Confidence Index rose to a reading of 73.7 in November, up from 73.1 in October. The November figure was the highest in more than four years, with a reading of 76.4 being created in February 2008.

Lynn Franco, director of economic indicators at The Conference Board, said in a statement that "the Consumer Confidence Index increased in November and is now at its highest level in more than four and a half years."

The November figure also surpassed the expectations of economists participating in a Bloomberg survey, who predicted that the indicator would measure 73. A total of 75 of these market experts took part in the poll, and contributed estimates ranging from 65 to 79.1.

The Expectations Index, which measures where consumers think the economy will go in the next six months, increased to 85.1 in November from 84.0 in October.

Franco said that "this month’s moderate improvement was the result of an uptick in expectations, while consumers' assessment of present-day conditions continues to hold steady."

This measure of consumer sentiment ticked up right at the start of the Holiday buying season, so retailers might benefit from stronger sales in the next few months. When accounting for these potential higher sales, these firms might benefit from using the most effective accounting systems.

Tepid Present Situation 

While it does seem promising that consumers expect the economy to improve in the next few months, their assessment of the current climate did not change significantly in November, with the portion of individuals describing existing business conditions as 'good' dropping to 14.4 percent from 16.5 percent. The number of participants saying that these conditions were 'bad' fell to 31.5 percent in November from 33.0 percent in October.

The lackluster sentiment surrounding existing conditions was also reflected in the Present Situation Index, which changed little and registered a reading of 56.6 in November compared to 56.7 in October.

Economic Data 

Even though the consumer confidence data provided by The Conference Board may paint a picture of sentiment that is only slowly improving, the report comes at a time when various other pieces of data signal recovery. A separate report indicated that the fraction of Americans who plan on purchasing a home rose to its highest level on record, according to the media outlet.

"Confidence is holding up well," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who estimated the measure of confidence measure would rise to 74, told the news source. "Spending is going to continue to increase. This bodes well for the fourth quarter."

Many market participants have been distracted by the possibility that America will go over a fiscal cliff, but the media outlet reports that continued improvements in consumption could help overshadow the fact that the U.S. might have to cope with more than $600 billion in tax increases in budget cuts.

Federal Reserve Chairman Ben Bernanke stated during the previous week that going over the cliff would create substantial risks for the economy, while successful budget negotiations could result in the United States having a strong economy in 2013.

What is your company doing to plan for the potential headwinds of the fiscal cliff and the tailwinds that could be created if consumption keeps improving? 

 

Topics:
Products and Companies: