As consumer confidence soars, businesses scramble to catch up
Monday, August 11, 2014
The U.S. job market is showing signs of warming as small businesses and high-wage jobs are beginning to hire again. In July, the Consumer Confidence Index reached 90.9, the highest level since October 2007, marking the sixth straight month of job gains this year.
Along with job gains, consumer spending increased by 0.4 percent in June. The harsh winter, a lagging housing market and inflation all had negative impact on the economy during the first half of the year, but things have heated up along with the weather.
Confidence in the market has been restored due to job growth, and more consumers are expecting their income to grow rather than drop. The unemployment rate fell to 6.1 percent in June, with employers adding 288,000 jobs. Job growth has grown 2.2 percent, exceeding the 2013 estimate of 1.9 percent.
Economists believe the job gains will continue in coming months. The Conference Board, a research group dedicated to reporting economic trends, also has high expectations, predicting the upswing in spending will continue in the second half of the year.
Small business owners who have held off on hiring are now feeling confident enough in the economy to add to their staff. As revenue rises and business picks up, small business are finding themselves understaffed and overworked.
Brad Barrett, the owner of Georgia-based Grill Grate, told The Associated Press that he has seen revenue increase by 55 percent from this time last year. Over Fourth of July weekend, he spent all weekend indoors fulfilling 500 orders of his backyard grill.
Barrett is now looking to hire two people — one to help fill orders and one to help with administration needs. Small business owners across the country are seeing similar growth and are scrambling to find new employees.
Retailers have seen an atypical climb in sales in July, a usually slow sales month due to the back-to-school shopping craze of August. Gap and L Brands both saw strong sales growth, with Gap sales even exceeding sales expectations. Topping the increases in sales, Victoria's Secret, a subsidiary of L Brands, earned a 5 percent sales increase, exceeding analysts' expectations for a 2.7 percent increase.
According to the National Retail Federation, back-to-school shoppers are expected to spend $26.5 billion on goods this month. The average family will spend $669.28 on back-to-school goods, a 5 percent increase in 2013 spending.
Car sales have also seen significant growth. Faulkner Hyundai, a small car dealership in Harrisburg, Pennsylvania, is seeing such an upswing in car sales that managers are filling in as salesman, according to the AP.
In particular, the manufacturing industry has soared. Automakers sold 1.4 million vehicles in July and are expected to sell 16.5 million vehicles by the end of the year, making it the highest auto sales year since prerecession 2006.
GM sold 256,160 vehicles in the U.S. in July, the company's best July sales total since 2007. Ford, Chrysler, Toyota and Hyundai also saw significant gains. Along with confidence in the economy, low interest rates and sales programs have driven the increase.
Because consumer spending accounts for 70 percent of U.S. economic activity, spending will continue to be closely watched. Although consumers are beginning to feel more secure about the economy, the Consumer Confidence Index still remains below the prerecession level of 11.9 in 2007. The all-time-high Consumer Confidence Index, 144.7, was reached in 1999 during the dot-com boom.
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