Small business owners may not be getting a boost in spending anytime soon, a new report has found. According to a survey conducted by the University of Michigan and Thomson Reuters, consumer confidence levels fell from July. Last month, the consumer confidence index ranked at 85.1, the highest level since 2007 – this month, that number slipped to 82.1.
Consumer confidence ratings have long been tied to spending habits among the public, which means entrepreneurs may have to continue waiting for the surge in spending so many of them need to thrive.
Although exact reasons for the dip have not been found, those who conducted the survey attribute the decline to government uncertainty.
“The August survey indicates that the recent confidence gains have stalled as consumers await decisions on the federal budget and monetary policy,” Survey of Consumers chief economist Richard Curtin said.
Fall in confidence
In general, consumers do not feel overwhelmingly confident in federal economic policies that affect large and small businesses alike. Decreased spending, however, leaves small businesses strapped for funds as they await further sales to benefit their companies.
The report revealed differences in consumer confidence levels are dependent on household income and other demographic factors. Households with incomes below $75,000 became more pessimistic about the future of the U.S. economy, while households of all other income levels expected slower growth over the coming year, as well as increased interest rates.
Increased interest rates, as well as higher mortgage rates, have contributed to the fall in optimism among the public. Long-term rates have increased by more than 1 percent over the last three months, making many wary of entering the housing market or spending more on shopping and other services. Mortgage rates continue to climb as the Federal Reserve has announced it will begin a steady decrease in financial support of the economy, worrying many consumers and businesses alike.
Curtin commented on the impact of the federal government on consumer confidence.
“A renewed Congressional storm, as well as rising market interest rates, could trim the anticipated gains in consumer spending and weaken the pace of overall economic growth,” Curtin said.
Pessimism among consumers is often a negative sign for the state of small business, as entrepreneurs rely on stable sales to stay afloat. If a small business owner is having trouble managing cash flow in light of these circumstances, they can come to National Funding for assistance. National Funding can help owners with getting a small business loan or provide a cash advance for business needs.