The Brief

The University of Michigan Survey of Consumers – a survey consisting of approximately 50 core questions covering consumers’ assessments of their personal financial situation, buying attitudes and overall economic conditions – is currently registering 68.9, down from 70.1 in September.

While real GDP is expected to increase 2.4% year-over-year in 2024, consumers remain concerned with rising rent, utilities, insurances and grocery costs. From long-term inflationary impacts to climbing mortgage rates, consumers report feeling stressed about finances.

Indeed inflation is slowing and the U.S. economy is trying to outrun a recession, but JPMorgan Chase CEO Jamie Dimon says several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade, geopolitical tensions and remilitarization of the world.

“There is significant human suffering, and the outcome of these situations could have far-reaching effects on both short-term economic outcomes and, more importantly, on the course of history,” Dimon said in an interview with CNN, referring to war in Ukraine and Israel’s war against Hamas and Hezbollah.

Despite various hardship, “We see spending patterns as being solid and consistent with the narrative that the consumer is on solid footing and with a strong labor market,” he affirms.

Nationally, the seasonally adjusted Fiserv Small Business Index held steady at 141, reflecting three straight months of steady consumer spending. On a year-over-year basis, both small business sales (+1.8%) and total transactions (+4.0%) grew compared to 2023. Month-over-month sales (+0.1%) and transactions (-0.6%) remained relatively flat compared to August.

“Small business sales ticked forward at a steady pace in September, showing resiliency in consumer spend despite meaningful shifts to spending patterns,” says Prasanna Dhore, chief data officer at Fiserv. “Notably, consumers diverted more spend in the month to specialty trade, technology, education and healthcare services, while retail and restaurant spending growth slowed.”

Key Takeaways, Courtesy of Fiserv:

On a monthly basis, Retail Trade (-1.7%) “cooled off” following a strong August, primarily attributed to less foot traffic (-1.3%). Average ticket size also notched lower (-0.3%). Building Materials and Garden Equipment (0.1%) was the only retail category to grow in sales; Gasoline and Fuel Dealers (-3.3%) and Food and Beverage Retailers (-1.9%) posted the biggest declines.
Professional, Scientific and Technical Services continued its upward trajectory in sales (+11.9%) and transactions (+8.1%) year over year; month-over-month sales grew (2.1%) despite transactions slowing (-0.4%) compared to August.
Specialty Trade Contractor sales grew (+4.4%) year-over-year, while transactions grew (+2.4%). Month-over-month sales rose (+2.8%), even as transactions slowed (-1.4%).
Additional year-over-year sales growth in service categories included Web Search, Libraries and Information Services (+21.5%), as well as Personal and Laundry Services (+2.8%) and Utilities (+2.3%); Ambulatory Healthcare (+4.7%) and Educational Services (+3.9%) led month-over-month growth.

After a poor performance in August, the NFIB Small Business Optimism Index rose by 0.3 points in September; however, at 91.5, it is the 33^rd consecutive month below the 50-year average of 98.

Of concern, the Uncertainty Index rose 11 points to 103 – the highest reading recorded. Data shows approximately 51% of owners reported capital outlays in the last six months, down five points from August. Meanwhile, the number of owners reporting inventory gains fell four points to a net negative 13% (seasonally adjusted) – the lowest reading since June 2020.

Of those surveyed, 59% reported hiring or trying to hire – down three points from August. Approximately 52% of owners reported few or no qualified applicants for the positions they were trying to fill (down four points). In addition, 30% of owners reported few qualified applicants for their open positions (down one point) and 22% reported none (down three points). Reports of labor quality as the single most important problem for business owners fell to 17%. Labor cost reported as the single most important problem for business owners was unchanged at 9%, four points below the highest reading of 13% reached in December 2021.

“Small business owners are feeling more uncertain than ever,” says Bill Dunkelberg, NFIB chief economist. “Uncertainty makes owners hesitant to invest in capital spending and inventory, especially as inflation and financing costs continue to put pressure on their bottom lines. Although some hope lies ahead in the holiday sales season, many Main Street owners are left questioning whether future business conditions will improve.”

Image Source: NFIB Small Business Optimism Index

Professionals in the automotive, RV and powersports industries remain steadfast in their efforts to evolve their business models and grow their brands in the face of adversity. As such, the monthly Key Performance Indicator Report serves as an objective wellness check on the overall health of our nation, from the state of manufacturing and vehicle sales to current economic conditions and consumer trends. Below are a few key data points explained in further detail throughout the report.

Top Takeaways:

Economic activity in the manufacturing sector contracted in September for the sixth consecutive month and the 22^nd time in the last 23 months, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% on a seasonally adjusted basis, following the same increase in July and August, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index increased 2.4% before seasonal adjustment.
Total new vehicle sales for October 2024, including retail and non-retail transactions, are projected to reach 1,327,600 – a 2.1% year-over-year increase on a selling day adjusted basis, according to a joint forecast from J.D. Power and GlobalData.
Powersports Business says dealers across the country reported an overall combined revenue decline of 6.5% year-over-year in August, according to composite data from more than 1,700 dealerships in the U.S. that utilize CDK Lightspeed DMS. On average, dealerships were down 4.2% in parts, 7.3% in major units and 1.8% in service.

Image Source: Powersports Business

KPI – October 2024: The Brief

By Pat Curtin