The Brief

The Conference Board Consumer Confidence Index® fell to 98.7 (1985=100) in September, following an upwardly revised 105.6 in August. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – dropped by 10.3 points to 124.3. The Expectations Index – focused on consumers’ short-term outlook for income, business and labor market conditions – declined by 4.6 points to 81.7 and is hovering at a rate which historically signals a recession ahead.

While real GDP is expected to increase 2.4% year-over-year in 2024, consumers are more concerned with rising rent, utilities, insurance and grocery costs. From inflationary impacts and soaring debt to cutbacks in the workplace (fewer hours, slower payroll increases and fewer job openings), consumers report feeling stressed about finances.

According to senior reporter David Hollerith, JPMorgan Chase CEO Jamie Dimon recently “poured more cold water” on a notion that the U.S. central bank is likely to achieve an economic soft landing. “I wouldn’t count my eggs” on the outcome, Dimon was quoted as saying at the Atlantic Festival in Washington, D.C.

Though businesses across the country are undeniably caught in the middle of tapered consumer spending, August provided some relief. Nationally, the seasonally adjusted Fiserv Small Business Index held steady at 141. On a year-over-year basis, both small business sales (+1.6%) and total transactions (+5.7%) grew year-over-year, “pointing to healthy consumer foot traffic,” according to company experts.

“Consumers made notable shifts to their spending patterns in August, resulting in restaurant and retail – including grocery, gas stations and clothing – all trending upward in the month,” says Prasanna Dhore, chief data officer at Fiserv. “Meanwhile, many service-based businesses, including specialty trade contractors and professional services, saw growth rates slow.”

Key Takeaways, Courtesy of Fiserv:

Month-over-month sales declined slightly (-0.3%) compared to July, despite transactions growing (+1.3%). Fiserv analysts say transaction growth outpacing total sales can partly be attributed to recent declines in inflation, including July 2024 marking the lowest inflation rate since early 2021.
The Small Business Retail Index rose one point in August to 147. Month-over-month retail sales (+1.0%) and transactions (+1.5%) both grew as average ticket sizes declined (-0.5%). Monthly growth highlighted a different mix of consumer priorities, with Clothing (+2.1%), Food and Beverage (+1.9%) and Furniture (+1.3%) seeing the most growth compared to July.
Food Services and Drinking Places, which includes restaurants, indexed at 126 in August, a three-point gain compared to July. Month-over-month restaurant sales (+2.7%) and transactions (+1.1%) increased as well, reversing a streak of two consecutive months of slowing restaurant sales and foot traffic. Average ticket size also grew (+1.5%) month-over-month.

Overall, small businesses continue to shoulder economic uncertainty, as the NFIB Small Business Optimism Index finished with a nosedive in August. At 91.2, the index declined by 2.5 points compared to a month prior and, with it, erased all of July’s gains. In addition, the Uncertainty Index rose to 92, the highest level since October 2020.

Entering its 32^nd consecutive month below the 50-year average of 98, inflation remains the top issue among small business owners, with 24% of owners reporting it as their top issue in operating daily business (down one point from July).

Of those surveyed, 62% reported hiring or trying to hire – up five points from July. Approximately 90% of those hiring or trying to hire reported few or no qualified applicants for positions they were trying to fill (up seven points and the highest since September 2023). Another 31% of owners reported few qualified applicants for their open positions (up two points), while 25% reported none (up five points). As it relates to labor quality, 21% of business owners said it is the single most important problem in business operations (up two points).

“The mood on Main Street worsened in August, despite last month’s gains,” says Bill Dunkelberg, NFIB chief economist. “Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase. Uncertainty among small business owners continues to rise as expectations for future business conditions worsen.”

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 August for the fifth consecutive month and the 21^st time in the last 22 months, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
In August, the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% on a seasonally adjusted basis, following the same increase in July, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index increased 2.5% before seasonal adjustment.
Total new-vehicle sales for September, including retail and non-retail transactions, are projected to reach 1,164,900 – a 1.8% year-over-year decrease on a selling day adjusted basis, according to a joint forecast from J.D. Power and GlobalData.
RV shipments hit 29,105 units in August, a 3.7% year-over-year increase, according to an RVIA manufacturer survey.
Powersports Business says dealers across the country reported an overall combined revenue decline of 6.5% year-over-year in July, 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 – September 2024: The Brief

By Pat Curtin