As February begins, we’re coming off a month dominated by good news. In January, the Consumer Confidence Index was up . . . new home sales were up . . . the Dow Jones was up . . . and sales at our boat shows were up. In fact, the final three months of 2010 saw the economy growing at the best rate since the start of last year.
The recovery now appears to be steadily gaining momentum. But the really good news is that consumers started spending late last year at the best rate since 2006. And, as we in the marine industry recognize, real economic growth and our industry’s recovery are dependant on consumer spending.
Specifically, consumer confidence hit an eight-month high in January. The CC Index rose from 53.3 in December to 60.6 last month. According to Lynn Franco, director of the Conference Board Consumer Research Center, “Consumers have begun the year in better spirits,” she said. “Consumers rated business and labor market conditions more favorable and expressed a greater confidence that the economy will continue to expand and generate more jobs in the months ahead. Income expectations are also more positive.”
It was primarily consumer spending that triggered overall economic growth of 3.2 percent in the last quarter of 2010, according to the Commerce Department. Surprisingly, for all last year, the economy grew 2.9 percent, the most since 2005. Many economists now believe we can count on consumers to push the economy to stronger growth this year. For example, economist Sung Won Sohn at California State University told the Associated Press: “Consumers will be picking up the slack this year as the government stimulus fades.”
On the housing front, the news was encouraging, too. The Department of Housing & Urban Development reported sales of new single-family houses rose in December (up 17.5 percent from November) to the highest level since last April when a federal tax credit was boosting the market. Meanwhile, pending home sales rose 2 percent in December, racking up the fifth increase in six months.
Momentum for consumer spending is also being fueled by two other considerations. First, the cut this year of 2 percent in the Social Security payroll tax is fattening paychecks and, while some predicted taxpayers would save or use it to reduce debt, more and more are now believing the consumer will do what he does best – spend it.
Second, the stock market has essentially recovered and is riding at the highest points since mid 2008. Many 401Ks that dropped to 201Ks in 2009 have seen recovery and that can make people feel more comfortable about spending.
All this, then, is consistent with the improved selling being reported at boat shows around the country. In fact, nearly all major shows that ran in January experienced some increase in attendance and significantly better sales for dealers exhibiting in the shows. Clearly, this is more evidence that if you’re not in your local boat show this month, it merits your serious reconsideration.