Quarterly Update On U.S. Overall Customer Satisfaction And Commentary On Automobiles & Light VehiclesSource: CFI Group
By Professor Claes Fornell, The Donald C. Cook Professor of Business Administration, Stephen M. Ross School of Business, University of Michigan, Chairman, CFI Group
As Consumer Demand Goes—So Goes the Economy
The U.S. economy suffers from many ailments, the most important of which is the lack of growth in consumer demand. Payrolls and job listings are up, bankruptcy rates are down, banks are lending more, and—at least for now—home prices are recovering. But none of this positive change seems to translate into healthier consumer spending growth.
Virtually all of American income growth is going toward increased savings. Labor productivity is up as well—which is usually a good thing—but higher productivity can work to discourage hiring. This, in turn, creates more anxiety about the economy and weakens household spending, which currently has a tepid growth trajectory of 1.5%.
A flat American Customer Satisfaction Index (ACSI) does not help the economy either. Consumers are more willing to spend if they expect their satisfaction (utility) from consumption to rise. At a score of 75.9 on a 0 to 100 scale, aggregate customer satisfaction is exactly where it was in the first quarter of 2012 and as far back as two years ago. The good news is that customer satisfaction is not contracting and that it remains at a generally high level.
Stable and reasonably high customer satisfaction at the national level means that the U.S. economy is less likely to follow Britain and France into recession; however, it is unlikely to help speed up economic recovery either. Not only must the anxiety about the present state of the economy lessen, overall customer satisfaction must increase as well. This would lead to increased demand, more household spending, and a quicker recovery. The stumbling block here is not so much a lack of discretionary income, but rather that income is not being spent. The ACSI predicts a spending growth of about 1.8% to 2.0%, when what is needed to propel recovery is closer to 4.0%.
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