High consumer optimism is good news for American retailers
American consumers are steadily regaining their confidence both in the economy and their own financial conditions as recent research has revealed that sentiment and spending are up. This is good news for retailers, especially as the holiday season approaches. These positive numbers are pointing to signs that this year's holiday purchasing totals will at least meet, if not surpass, last year's amounts.
Consumer spending increasing
A newly released study by Chase, titled the Chase Freedom Lifestyle Index, looked at the recent buying habits of their cardholders and found that for this year's third quarter, spending increased by 4 percent from the same period last year. From the second quarter, there was a 1 percent increase, continuing the trend of rising spending as it jumped by 9 percent between this year's first and second quarters. The research found that there were a variety of factors that contributed to the jumps in purchasing, including boosts in back-to-school shopping, outdoor and leisure activities.
"Consumers are slowly beginning to open their wallets, based on the steady increases in spending we are witnessing," said Phil Christian, general manager of Chase Freedom. "The overall trends suggest that consumers are increasing discretionary entertainment and leisure spending on a year-over-year basis, which is a good sign from an economic recovery perspective. As we enter into the holiday season, we believe the current spending trends point to what is likely to be a strong holiday shopping season in the fourth quarter."
Sentiment also on the rise
Besides spending, another factor that is pointing to a steadily recovering economy is the recent rise in consumer sentiment. According to the Thomson Reuters/University of Michigan's October index, sentiment rose to 83.1, up from 78.3 in September. This month's figure also represents the highest it has been since September 2007. Authors of the report and economists stated that Americans are feeling more optimistic about economic conditions for both the short- and long-term, as the nation's unemployment rate in September fell to 7.8 percent.
"We are getting some quite interesting signals from consumer sentiment and employment data – both (the) unemployment rate and initial claims – that there has been some quite significant improvement in the economy," said David Sloan, an economist at 4Cast.
