Consumer Sentiment Improves

For the first time in three months, consumer sentiment has improved. Indeed, it has improved sharply, according to the Reuters/University of Michigan index. The index measures consumer sentiment, how people feel about the economy, and shows that improvement was made to 70.2 from 65.7. This is a much better improvement than many thought, showing that consumers are starting to feel better about the economy.

This is very important for the economy because perception is a big part of the way things go. If consumers feel worried about the economy, they are less likely to go out and spend money. Consumer spending makes up about 2/3 of the U.S. economy. Consumers are a big factor — as you probably know if you run a business. So the fact that the consumer sentiment index is moving up past 70 is a good sign.

Of course, there is still quite a ways to go: Things aren’t considered really rosy until the consumer confidence index hits 90. But at least it’s moving in that direction. And businesses might start seeing a positive change to their bottom lines — especially as we begin moving into the holiday shopping season. It could be that we really are getting ready to head out of this recession.

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