Saturday, July 31

The State of Business Confidence in The U.S

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Business confidence is slowly rising in the U.S, but what does this tell us about the U.S market and consumer behavior, and whether it is a good time to start your business. Well, let’s discuss the state of business confidence, and consumer confidence in the U.S, and you can decide from there.

What Is Business Confidence And Consumer Confidence?

Business confidence is understood as the measure of optimism or pessimism business owners and managers feel with regards to the future of their companies and the markets in which they operate. The amount of optimism or pessimism at any given time is extrapolated from the U.S Business Confidence Index, which is based on a survey on developments in production, and orders and stock of finished goods in different industries and provides information of future economic developments.

The Consumer Confidence Index is the leading indicator of consumer confidence in the U.S. It gives us an indication of future developments in households’ consumption and saving, based on a survey questionnaire regarding their expected future financial situation, their view of the general economic situation, inflation, unemployment, their ability to save and intention to make big financial purchases.

Business Confidence In The U.S

Business confidence in the U.S has fluctuated dramatically this year, and in light of recent global events, it is no surprise. According to the business confidence survey, in February 2020 business confidence was measured at a value of 99.04 and only decreased from there. In March it decreased to 98.62, in April to 98.16, and in May to 98.38. In June, we saw the first turn-around, with the business confidence survey reporting a value of 99.24. This was the first sign of recovery. In July, it increased even further to 100.05, and again in August to 100.74. Despite the drastic fall in business confidence during February and June, these recently increasing values indicate business confidence is slowly rising to average values of previous years; it also signals an upward turning point in economic activity, in relation to the first two quarters of this year. And with regards to newly formed businesses, the United States Census Bureau research on business formations in the U.S, reported an increase in the amount of business formation applications, with a 45.1% change of 2019 with 66,960 business formation applications, to 97,190 business applications in 2020 alone. This is also indicative of an upward trajectory and mobility of the U.S economy despite the recent drop in business confidence indicators experienced in the first half 2020. As it stands, the U.S economy is steadily on the rise, with increased economic growth and output, and business owners are cautiously becoming more optimistic about the future prospects of their companies.

Consumer Confidence In The U.S

While it’s all good and well to know the future business expectations and predictions, understanding the state of consumer confidence in the U.S is all the more important. At the start of the year, the consumer confidence survey indicated a value of 89.1 in March, and 71.8 in April, which is a very big drop from February when it was 101. Consumer confidence clearly decreased significantly in the first two quarters of the year as a consequence of the Coronavirus (job loss, nationwide lockdowns, etc). Yet, as things start returning to normal, the consumer confidence survey reported an increase in consumer confidence indicators, with the value of 74.1 in August, and 78.9 in September 2020. Although the Consumer Confidence Index showed a decrease in consumer confidence in the US in the first two quarters of the year, this steady increase witnessed in August and September is evident of a boost in consumer confidence towards future economic circumstances, which means consumers will be less inclined to save and more prone to spending money for the following couple of months.

Knowing What Lies Ahead

Starting a business in times like these may be difficult but it is not impossible. Statistics show the U.S economy slowly rising and more businesses are being formed with each passing day, many of them with the help of online incorporation and business formation services. Some of the best business formation services handle the entire business formation process, they provide registered agent services and a host of other features for their clients. Many formation services also provide specialized services that businesses starting out may require.

Starting a business these days is all about knowing your market and the expectations of potential customers. It would thus be worth a closer look at the rate of business confidence in your industry, and the consumer confidence of your target audience, just to know what you are stepping into before you make any drastic moves.


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