Middle Tennesseeans gain confidence in economy
Jennie Harrelson, on her 102nd birthday, is flanked by daughter-in-law Betty Harrelson (right), son Bobby Harrelson and his wife Freida.
Jennie Harrelson, on her 102nd birthday, is flanked by daughter-in-law Betty Harrelson (right), son Bobby Harrelson and his wife Freida.
Based on the results from a recent telephone poll of 418 randomly selected residents of Davidson, Rutherford and Williamson counties, consumers’ ratings of the economy were more optimistic, compared to the results from the February poll. The current poll was conducted the evenings of Tuesday April 20, and Thursday April 22, 2004.
The overall Middle Tennessee consumer confidence index increased to 317, from 301 in February. This continues the general trend of increasing consumer confidence that began in the beginning of last year.
Apparently, consumers recognize the positive signs of economic growth, such as increased retail sales and improvements in the job market. Perceptions of the current economy were more positive, as the current situation index gained to 54, from 46. Perceptions of buying conditions also gained to 149, from 131.
However, consumers were somewhat uncertain about the future economy, as the future expectations index slipped to 114, from 124. The psychology of consumers can have dramatic effects on the future of the economy. Since consumer spending makes up two-thirds of the American economy, changes in consumer confidence that translate into changes in purchasing patterns can have significant effects on the economy
Comparison To The Nation
The Conference Board’s April 27, 2004 survey showed an increase in overall confidence among American consumers. Still, consumers in Middle Tennessee continue to have a significantly more optimistic outlook compared to consumers in the country as a whole. Most notably, local consumers have more positive views of the current and future American economy, the future outlook for jobs, and their personal financial situation.
Perceptions of the Current and Future Economy
The percentage of consumers who rated the national economy as “good” remained relatively steady at 31 percent, compared to 30 percent in February. Consumers’ assessment of current business conditions in Middle Tennessee rose sharply. The percentage of consumers who rated the local business conditions as “good” increased to 48 percent from 38 percent. However, expectations for the future were not as optimistic.
The percentage of consumers who said that business conditions in the country as a whole would be “better six months from now” dropped to 39 percent from 44 percent. The percentage of consumers who said that business conditions in Middle Tennessee will be “better six months from now” remained relatively steady at 38 percent, compared to 37 percent. Still, only nine percent of consumers expect that business conditions in Middle Tennessee will be “worse” in the next six months.
Jobs and Employment Outlook
The outlook for jobs is more positive. The percentage of consumers who rated jobs as “easy to find” gained to 17 percent from 15 percent. Further, the percentage of consumers who expect “more job openings” in the next six months in Middle Tennessee rose to 33 percent from 29 percent. Only 18 percent of consumers in The Conference Board’s (April 27, 2004) national survey expect more jobs to be available over the next six months.
Personal Finances
The percentage of consumers who said that compared to a year ago they are “better off” dipped to 33 percent from 38 percent. However, expectations for future personal finances were more optimistic. The percentage of consumers who expect to be “better off” financially 12 months from now rose to 50 percent from 46 percent. Only 17 percent of consumers in the Conference Board’s national survey expect their incomes to increase. Further, only seven percent of Middle Tennessee consumers expect their personal finances to be “worse” in the next 12 months.
Buying Conditions
Perceptions about buying conditions were also positive. The percentage of consumers who said that now is a “good time” to buy a house increased to 79 percent from 73 percent. Similarly, the percentage of consumers who said that now is a “good time” to buy a car increased to 56 percent from 52 percent. The percent who said that now is a “good time” to buy large items for the home also gained to 44 percent from 42 percent. Only 11 percent of Middle Tennessee consumers said that this is a “bad time” to make large purchases.
The Political Side of Consumer Confidence
As we approach the Presidential election, many issues begin to take on a political nature. Party affiliation of consumers can have a significant affect on their perceptions of the economy. The current data were further examined to see if consumer confidence scores varied by political party affiliation. The pattern of results mirrors that which was found earlier this year. Consumers who identified themselves as “Republicans” had significantly more positive views of the economy than did consumers who identified themselves as “Independent.” And these are in striking contrast to the pessimistic views of those who identified themselves as “Democrat” consumers. In fact, Democrat consumers continue to have a negative consumer confidence score for the present situation index.
About the Survey
The results reported here are based on telephone interviews with 418 randomly selected adult residents, 18 years and older, from Davidson, Rutherford, and Williamson counties. Phone interviews were conducted from 4 pm to 8 pm the evenings of Tuesday April 20, and Thursday April 22. With a sample of 418 people, we can say with 95% confidence that the amount of survey error due to taking a random sample instead of surveying all members of the population is ? 4.8%.
Other factors such as problems with question wording and question interpretation can also lead to additional bias or error being introduced into the results. Results from the Middle Tennessee consumer confidence surveys can be compared to national consumer confidence surveys published monthly by the Conference Board (www.conference-board.org). This report is also available on the MTSU Management and Marketing Department’s web page (www.mtsu.edu/~mgmtmkt/).
The Consumer Confidence Index is based on all 11-survey questions outlined below. The score is computed by adding the percentage of positive responses to each question, and subtracting the percentage of negative responses. The Present Situation Index is based on questions 1, 3, 5, and 7 (see the following tables of results). The Future Expectations Index is based on questions 2, 4, 6, and 8. The Purchasing Index is based on questions 9, 10, and 11.