First-quarter economic growth in the U.S. was an impressive 3.2%, beating expectations. At the same time, the unemployment rate is the lowest it’s been in 49 years, according to numbers provided by the University of Michigan.
Consumer sentiment, already at a healthy 97.2 in April, rose to 102.4, beating expectations of a more modest rise to 97.5. These numbers, coupled with low unemployment, indicate that consumers view overall economic prospects favorably, and this bodes well for small and local businesses.
Consumer confidence indicates how willing people are to spend, as well as how willing they are to borrow and save. The higher the consumer confidence level, the likelier consumers are to make purchases.
Local and Small Businesses Benefit from Higher Consumer Confidence
Optimism among small business owners is also continuing to track upward, with sales improvements seen in April, alongside more confident job creation, strong hiring, and expectations for better business and credit conditions. In fact, NFIB President and CEO Juanita D. Duggan says that the current economic boom is largely due to strong growth in the small business sector.
Consumer confidence has a strong impact on small business revenue, with 46% of SMBs identifying consumer confidence as the top financial indicator for their business. By closely tracking consumer sentiment, local businesses can make more informed business decisions and enjoy higher profits when consumers are more confident about spending.
Small Business Owners Remain Cautious About Expanding
Ever since the Great Recession, however, small businesses have remained more conservative about expansion. The Federal Reserve is taking steps to ensure that economic growth doesn’t get out of hand, and small businesses are somewhat cautious about things like raising financing.
But that doesn’t mean local and small businesses aren’t optimistic about their future. With more people employed and strong growth in the economy, local businesses can look forward to consumers who are freer with spending. And when consumer sentiment is strong, people are more likely to use their credit cards, with the confidence they’ll be able to pay off consumer debt.
Confidence, More Money Can Prevent Bad Debts
Increased consumer confidence, along with other positive economic news, indicates that local businesses can look forward to fewer problems with debt recovery. Confident consumers with more cash in their bank accounts are less likely to get themselves into difficult consumer debt situations, and those who do are more likely to have resources to address those issues.
Debt collection is challenging for local businesses, because they want to be well-regarded in their community, yet they need to collect on debts to continue to operate. With higher consumer sentiment, collecting on debt is less likely to involve consumers who cannot pay, and hence, the probability of successfully collecting is higher.
Rocket Receivables can be the best ally a local business can have when handling the delicate and challenging issue of debt collection. Contact Rocket Receivables to learn more about how we can help your business. You can also buy now and get started today on recovering debt and improving your operating conditions.