Even though consumer spending dipped in April, consumer sentiment ended May near a six-year high, which could help boost sales at small U.S. retailers in the near future.
Should retailers see increased sales, more customers will be frequenting stores, which, in turn, leads to a greater risk of an injury occurring that could lead to a lawsuit. With that said, the owners of these companies may want to consider purchasing additional liability insurance to ensure they are protected from such incidents.
Consumer spending dipped 0.1 percent in April, according tot he U.S. Department of Commerce, which would be a bad sign for retailers if confidence didn’t surge in May.
Sentiment hits near six-year high in May
The Thomson Reuters/University of Michigan final index of sentiment increased from 76.4 in April to 84.5. This was higher than expected, as the preliminary reading came in at 83.7 earlier in the month.
Two factors that contributed greatly to the boost in consumer sentiment were rising home and stock prices, which helped increase personal wealth in May.
“Housing is improving, house prices are rising, gasoline prices have been a support for much of this year to confidence, and we have stock prices that have climbed – I think al of that is helping to lift consumer sentiment,” Ryan Sweet, senior economist at Moody’s Analytics, told Bloomberg. “If consumers remain relatively upbeat about the economy’s prospects, they’re unlikely to pull back on spending.”
Rising sentiment has been a good sign of the improving economy, as it is much higher than during the recession. The index averaged 64.2 throughout the financial crisis that ended in June 2009. However, there is still more improvement needed to reach pre-recession levels, as the index averaged 89 in the five years before the downturn.
Consumers are felling better about the future as well, as the expectations index increased from 67.8 in April to 75.8. The preliminary reading for this index was 74.8.
As consumer become more confident, they may begin to shop at retailers more often. This leads to a bigger amount of traffic shopping in stores across the country.
While this can lead to higher sales it also increases the risk of an incident occurring that could lead to a lawsuit. For this reason, small business owners need to ensure they have the necessary liability insurance coverage before activity picks up.