PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Consumer Confidence Dips in November

By at 24 November, 2020, 5:47 pm

by Raymond J. Keating-

With COVID-19 cases spiking during the colder weather, as predicted, and while we await the arrival of vaccines with widespread distribution on the market, enormous uncertainties persist throughout the economy. That is certainly the case for entrepreneurs, small businesses, and their workers.

Obviously, the Christmas holiday shopping season is vital for many small businesses. The latest news from the Conference Board points to a dip in consumer confidence at this important time.

In fact, it’s hard to find much that is positive in this report, with the Consumer Confidence Index falling in November after being flat in October. This follows on an underwhelming retails sales report for October released last week.

Most troubling was the uncertainty expressed by consumers as they look ahead.

Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said:

“Consumers’ assessment of present-day conditions held steady, though consumers noted a moderation in business conditions, suggesting growth has slowed in Q4. Heading into 2021, consumers do not foresee the economy, nor the labor market, gaining strength. In addition, the resurgence of COVID-19 is further increasing uncertainty and exacerbating concerns about the outlook.”

While many in the media assert that the consumer is the driving force behind the economy – usually pointing out that two-thirds to 70 percent of GDP has to do with consumer expenditures – the reality is, as SBE Council has pointed out before, that the consumer is a follower.

When entrepreneurs and investors are starting up and expanding businesses, and that also leads to hiring, consumers are confident and spending. Unfortunately, small businesses are experiencing grave uncertainty, thanks to this pandemic, especially with a new round of restrictions and shutdown orders imposed by state and local governments. The consumers’ strength and ability to bounce back after the initial hit of the pandemic have been impressive, but that will not last without business growth and investment.

At the same time, a confident consumer further feeds growth, and remains critical to so many retail businesses, especially during the holiday season.

The current dip in consumer confidence, and its underlying reasons, make clear the persisting troubles and enormous challenges that we all face now and in the coming months.

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

 

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