PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Conference Board Index: Consumers Feeling Better in September

By at 30 September, 2020, 10:50 am

 

by Raymond J. Keating-

According to the latest report from The Conference Board, consumers were feeling better in September, though still not as good as they were before the pandemic hit.

The Conference Board noted that its Consumer Confidence Index was up in September, after a decline in August. The index registered 101.8 in September, a notable move up from August’s 86.3 reading.

Lynn Franco, who is the senior rirector of Economic Indicators at The Conference Board, said, “Consumer Confidence increased sharply in September, after back-to-back monthly declines, but remains below pre-pandemic levels. A more favorable view of current business and labor market conditions, coupled with renewed optimism about the short-term outlook, helped spur this month’s rebound in confidence. Consumers also expressed greater optimism about their short-term financial prospects, which may help keep spending from slowing further in the months ahead.”

The Consumer Confidence Index stood at 132.6 in February, then dropping to 118.8 in March, 85.7 in April and 85.9 in May. It blipped up to 98.3 in June, and then fell back to 91.7 in July and 86.3 in August. So, the September level of 101.8 is by far the best level since the pandemic hit the U.S.

The Conference Board reported, “The percentage of consumers claiming business conditions are ‘good’ increased from 16.0 percent to 18.3 percent, while those claiming business conditions are ‘bad’ decreased from 43.3 percent to 37.4 percent. Consumers’ assessment of the labor market also improved. The percentage of consumers saying jobs are ‘plentiful’ increased from 21.4 percent to 22.9 percent, while those claiming jobs are ‘hard to get’ decreased from 23.6 percent to 20.0 percent.”

That’s still a pretty grim outlook on business conditions, and it needs to be kept in mind that consumers are followers. That is, their actions follow what businesses are doing in terms of investment and hiring, not to mention the creation of new businesses.

So, while consumer views certainly matter, they are not a leading economic indicator, but more of a following indicator. Let’s hope that this September take on consumer confidence turns out to be consumers following an upward trend, rather than just another blip.

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

 

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