Higher Consumer Confidence, Rising Home Prices Could Lead To More Retail Spending

With consumer confidence on the rise, and home prices increasing, consumers might be more willing to spend money in the near future. As retailers begin to see more customers it might be a good idea to re-visit liability insurance policies, as one customer injury could lead to a lawsuit significant enough to cancel out the benefit of higher sales.

The weekly Bloomberg Consumer Comfort Index increased to minus-29.4 in the week ending May 19, up from minus-30.2 in the previous week. One of the reasons the index has been increasing is the measure of personal finances being positive for a sixth consecutive week.

Higher stock prices and home values have helped consumers repair their finances, which also boosted confidence.

“Price appreciation in domestic equity markets and housing likely bolstered confidence of Americans in the sustainability of the current expansion,” said Joseph Brusuelas, senior economist at Bloomberg LP. “The late arrival of the recovery in housing should serve to elongate that expansion.”

Home value appreciation remains elevated in April
In addition to rising consumer confidence, home value appreciation could also lead to additional business at small U.S. retailers.

Annual home price appreciation exceeded 5 percent for the sixth straight month in April, according to the Zillow Home Value Index. The index stood at $158,300, a 0.5 percent bump from the previous month and 5.2 percent year-over-year improvement.

“April marks the sixth straight month of annual home value appreciation of 5 percent or above, the longest such streak since the height of the bubble in 2006,” said Zillow chief economist Dr. Stan Humphries.

Of the 30 metros studied by Zillow, 29 showed annual appreciation in April, with the majority having double-digit increases. Phoenix posted the strongest gains, while Chicago was the only metro in the top 30 that saw home values decline.

Should these factors lead small retailers to see more customers in the near future it is important that the owners of these businesses ensure their small business insurance portfolio is up to par.

One of the most essential insurance plans these companies can have is liability insurance. If a customer slips and falls in a retail store, they can sue that business for damages. Without coverage, retailers would be on the hook for the entire bill, but liability insurance helps cover some of the legal expenses and settlement or judgment costs.