If you’re like me, the first thing on your mind when thinking about summer is planning your summer vacation (assuming you haven’t already). The first thought is probably your ideal dream vacation - somewhere warm with good food and total relaxation. Then reality sets in. “How much can I spend” is usually the second thought you have, perhaps followed by “I think I’m going to indulge in that timeless trend of ‘staying local’…again.” Not that going anywhere is cheap: over the last year the price increase of transportation services exceeded the nationwide average price increase of all goods (3.7% vs. 2.7%), while the cost of driving your own car around increased by almost 10%. In 2008 people spent an average 3% of their annual income on travel expenses, and let’s face it after the last few years we all deserve a nice vacation. So is this year the right time to indulge in a big expense?
Aside from your personal finances, you might be concerned about where the economy is heading over the next few months. This question has an easy answer - what do YOU think? Literally, to get a good sense of how we might expect the economy to fare in the coming months we should do what we do with many things before we spend – get a second opinion. In this case, its 3,000 second opinions (pretty good, huh?). Every month there is an indicator that tells us what our peers think will happen with the economy over the next few months as it relates to jobs, spending, and prices. Think of it as the economy being put on trial each month with a jury of 3,000 peers.
This idea of understanding how your peers see their future ability to spend, called “consumer confidence,” can be an informative tool for assessing your own future spending ability. Because really, who isn’t influenced by their friends? The fact that it is closely watched by the finance world shows that what people’s expectations are has real influence over the economy. What YOU think matters! Generally, if people are confident in the economy they spend a larger share of their income, and in turn the economy grows – like a self-fulfilling prophecy. In April, consumer confidence increased over March, with confidence remaining positive pretty much over the entire last year. This means that your peers, located across the nation, believe the economy has and will continue to do well over the coming months. If you were concerned about spending money because of uncertainty on where the economy was headed, this should help you feel a little better.
So the next time someone asks if you’re concerned about spending the money to go away this summer you can say you’re confident in where the economy is going – along with 3,000 other people.
(Conference Board, Bureau of Labor Statistics)
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