Measurements of consumer confidence have been almost universally on the downturn the past few months after kicking off 2011 on a positive note. But we’ve found a few other surveys that show glimmers of light at the end of the economic tunnel.
One of the problems getting the economy kick-started has been the unwillingness of corporations to spend. Since tight-fisted consumers (and the unemployed) have not been willing to buy, warehouses remain full, creating no reason to replenish stock through new waves of manufacturing.
But that is starting to change, according to the Association for Financial Professionals. AFP has noticed that companies are starting to find ways to use the cash they have been accumulating and for the most part sitting on. In fact, 30% of companies it surveyed have begun making capital expenditures in the past 12 months.
“While the survey shows very conservative behavior, we believe it provides hope for intermediate term prospects,” said Jim Kaitz, AFP’s president and CEO. “Some companies are beginning to spend cash to build their operations. Others are seeing cash levels rise because their business picture is improving. As companies find opportunities to deploy this cash in the coming months, we will see the economy gain some momentum.”
Employment levels are still too high, so news from Express Employment Professionals is welcome. EEP says that 42% of the executives it surveyed are going to be hiring during Q3 2011 – and have already put a plan in place to make it happen. In all, two thirds of the 17K current or former clients it surveyed will be hiring from one to three people in Q3.
“We’re seeing employers’ confidence levels increase slightly,” said Robert A. Funk, CEO of Express. “Not only do they plan to hire new employees, but some are also considering reinstating previous pay and/or raises and lifting hiring freezes.”
Finally, Greenwich Associates found that credit is making its way back into the small business universe. If said that 59% of small businesses it surveyed have recently attempted to get capital during the last 12 months, and 57% of them succeeded. Both statistics represent improvement.
Brian Miller, COO and president of The Entrepreneur’s Source, commented, “The availability of capital for aspiring business owners makes business ownership an even more viable option for people in career transition. And it’s been our experience that lending institutions can be even more open to provide funding for a franchise.”
Miller noted another study from Capitol One which found that 85% of small businesses surveyed had access to the financing they need, representing a 70% increase year-over-year.
RBR-TVBR observation: It often seems that consumer and business economic sentiment is out of sync. A lot more consumers will be in sync if the businesses that responded to these surveys do come through with new investments and jobs.
A citizen with a job makes a much better consumer than one without, and when more citizens are being hired than laid off, citizens with jobs become more confident consumers. If we can get enough little things to help push the economy onward and upward and feed off one another, maybe we can finally break out of this down cycle.
