Consumers Getting a Spring Back in Their Step
BY Angus Loten
Dec. 12, 2005--After enduring months of deadly storms and sky-high gas prices, consumers are finally in a better mood these days, according to a new national survey.
That's good news for holiday retailers and small-business owners alike. While consumer confidence has lagged, spending has remained relatively strong, driving economic growth through much of the year.
So far in December, the University of Michigan's index of consumer sentiment has risen to 88.7, from a final reading of 81.6 in November. Mid-month results were released on Dec. 9.
The current conditions component of the index was also up in December, along with consumer expectations, which can foreshadow shifts in consumer spending habits further down the road.
The university's mid-month readings are based on survey responses from some 300 households, about half the amount reflected in final readings issued at the end of each month.
If the results hold, December will mark the second straight month of gains, signaling a renewed confidence in the economy following deep lows registered in the weeks and months since Hurricane Katrina slammed into the Gulf region on Aug. 29.
Within days of the storm's landfall, which knocked out oil production in the Gulf Coast, gas prices at the pump soared over $3 per gallon, dragging the October index down to a 13-year low. Gas prices have since dropped back down to as low as $2.19 last week, Energy Department figures showed.
Yet even as consumers reported feeling uncertain about the economy, they continued to spend. Last month, the Commerce Department reported a 0.9% gain in retail sales in October, the lowest ebb in confidence after the storms.
More recently, spending over the so-called Black Friday shopping weekend alone reached $28 billion, a 21.9% increase over last year, according to the National Retail Federation. Some 60 million shoppers hit stores Friday, about 7.9% more than the same day last year -- with 60.7% shopping at discount outlets, 47% at department stores, and 41.2% at smaller specialty stores, the NRF said.