PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Good News for Small Business: Jump in Consumer Sentiment

By at 30 March, 2019, 7:17 am

by Raymond J. Keating-

The latest report on consumer sentiment showed a big jump up for the entire month of March.

The University of Michigan Index of Consumer Sentiment increased from 93.8 in February to 98.4 in March. The March level was “slightly above the average of 97.2 recorded in the past 26 months.”

Rising income played a major part in the improvement in consumer sentiment. Consider the following from the report:

“The March gain in the Sentiment Index was entirely due to households with incomes in the bottom two-thirds of the income distribution, posting a gain of +7.1 Index-points, while households with incomes in the top third fell by 1.1 Index-points. Middle and lower income households more frequently reported income gains than last month, although income gains were still widespread among upper income households. Indeed, the last time a larger proportion of households reported income gains was in 1966.”

For good measure, expectation improved for economic growth: “Moreover, all income groups voiced more favorable growth prospects for the overall economy.”

That’s a powerful combination that serves as a clear positive for the remainder of 2019 economy and of course for small businesses. The key for policymakers is to not take steps that undermine income growth and expectations for strong economic growth.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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