December 9, 2014
The national level of customer satisfaction fell 0.7% in the third quarter of 2014 to 75.6 on a 100 point scale, according to the American Customer Satisfaction Index (ACSI), pointing to weak spending growth for the fourth quarter. This is the third consecutive quarterly decline in customer satisfaction for the country as a whole, which is at its lowest level since early 2011.
While most predictions for the Thanksgiving period projected strong growth, retail sales actually fell relative to the previous year. The suggestion that weak income growth is to blame is inconsistent with the data. Income growth has indeed been weak, but not worse than it was in 2013. In fact, American households are marginally better off now. Unemployment is down, and a major factor boosting consumers’ ability to buy, gas price, is at its lowest level in years, much lower than it was in 2013.
Based on income, gas price, and even consumer confidence, ACSI says an increase in consumer spending would be expected, but not if customer satisfaction is used as a predictor. There are two major factors that determine spending: expected satisfaction and ability to spend. The latter has improved somewhat, but the former has gotten worse, and continues to deteriorate. Accordingly, the ACSI prediction for the fourth quarter is weak spending growth of 1.8 to 2%, a pace behind the overall pace of the economy.
“The US economy needs more consumer demand to shake off these seemingly persistent doldrums,” said Claes Fornell, ACSI chairman and founder. “Low interest rates, some inflation and wage growth would all help, but consumers also need a reason to buy. Their satisfaction matters not only to them as individuals, but for the economy as a whole.”
Source: Retailing Today
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