Hey investors and sellers don’t rejoice right now! Just wait for some more days before you really celebrate about the information that consumer confidence has improved. We humans are always a in the habit of making assumptions, especially when things look to be happening in our favor. I know after this long drawn recession for a couple of years, after seeing the worst in business, any small drizzle of good news is sure to make you rejoice, but the rains are still far away . You’ve got to wait praying the ‘Economy Gods’ for that. The consumer confidence report released this month by the Conference Board shows a positive trend.  That’s true! The Consumer Confidence Index meter has risen from 47.1 in July to 54.1 in August, the Present Situation Index has also shot up from 23.3 to 24.9 in the last month and the Expectations Index rose from 63.4 to 73.5; but don’t be too hasty with your assumptions that sales of your products will shoot up immediately.

You should know that confidence does not necessarily translate to actual spending. Confidence is only an indication of the mental state of people. By being confident a consumer only wants to convey that he is not feeling insecure anymore and that he has the power to buy things and lead a good life once more. Thanks to the increased jobs in recent times! But this state of well-being does not mean that the consumers are going to start increasing their purchases. Don’t you think they’ve suffered enough to spend their long-awaited money liberally? I know how it was during the recession. The insecurity of losing my job (which thankfully I haven’t!) and moving into the future without much financial cushioning gave me a lot of sleepless nights. The first thing I’m  going to do with my increased money is save it up and then sleep well for some nights to come. Who wants to go to the market to immediately spend all that hard-earned money ? Of course, I shall go but not now.

You might think that I’m an individual case talking this way, but I’m not the only one with this opinion. According to Director Lynn Franco, Conference Board Consumer Research Center, “Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend. The Present Situation Index increased slightly, mainly the result of an improvement in consumers’ assessment of the job market. The Expectations Index improved considerably and is now at its highest level since December 2007 (Index, 75.8). Consumers were more upbeat in their short-term outlook for both the economy and the job market in August, but only slightly more upbeat in their income expectations. And, as long as earnings continue to weigh heavily on consumers’ minds, spending is likely to remain constrained.”

So you can make out that the consumer confidence is simply a spurt of positivism owing to the improved employment conditions. It’s just a temporary mental state created by the euphoria of the fading recession. Well, I don’t want to sound pessimistic. It’s just that I’m trying to show you the real picture. I wish as much as you do that this confidence is a permanent trend with the consumers.

When consumer confidence does not necessarily map on to spending does this mean that the created demand for your products, which is a major indication of the fading economy, will not remain? If consumers are not really ready to buy your products do you think your businesses are really going to flourish in the near future? Well, to me it definitely looks as though the recession is fading. But it’s not fading as fast as you think. As I said earlier, it’s just drizzling now. You’ve just got to wait a bit more for the rains to come and help you cultivate economic prosperity.

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