Confidence drop may be a trend with benefits


According to the latest peek into the minds of consumers from the research wizards at Prosper Insights and Analytics, consumer sentiment dropped slightly in September. By itself the stat it might not be much to worry about, but context may spell out a different conclusion.

The current sentiment reading shows 37% confident or very confident about the prospects for a strong economy. That is said to be only a small decline, but it’s the 3rd monthly decline in a row, the longest negative streak of the year.

When it comes to managing the family finances, pragmatism is the leading strategy, up by 4% over August. That may not be a totally bad thing, suggests Prosper – it could mean many are creating a little financial wiggle room for holiday gift purchases.
Still, most are buying only things that they need – a dark cloud to be sure, but this one also comes with a silver lining – the percentage is 5% lower than during September 2012, another positive indicators looking toward the 2013 holiday season.

However, the direct read on the holidays is that it is looking like a rerun of last year. Millennials are said to be the most likely to increase spendings, and Boomers are most likely to scale things down.

RBR-TVBR observation: There was an unusual confidence decline at the beginning of 2013. Over the years, we have watched consumers give a new year the benefit of the doubt with upbeat confidence claims, only to see the positive sentiments wash out by April or so.

2013 was different. The posturing in Washington over the so-called fiscal cliff was widely credited by economy watchers as the cause of a rare case of consumer negativity to open the year. Now we have the possibility of a government shut-down and the failure to adjust the debt ceiling looming, fights that have been expected all summer, so maybe that was contributing to a slump in overall consumer confidence.