FAIRLAWN, Ohio—The economy is showing signs of more engaged consumers, but a gradual softening in the consumption of automobiles could be cause to worry, according to Roger Tutterow, professor of economics at Kennesaw State, at the Hose Manufacturers Conference in Fairlawn Oct. 24.
Tutterow delivered the morning keynote address for the conference.
Consumer confidence has been gradually rebuilding from its low in November 2008, according to the University of Michigan's Index of Consumer Sentiment, Tutterow said. By the fall of 2014, it reached between 85 and 95. Last year's election caused a jump on that scale of 11 points from October to January.
"The good news is that surge in sentiment gave us a pop in terms of retail sales," Tutterow said. "We reached a point where we had retail sales of 5.5 percent for the 12-month period ending late last year."
In automobile sales, despite a big jump after the Cash for Clunkers program and steady light truck sales as gas prices drop, the consumption of automobiles has been gradually softening in the U.S., he said.
One of two explanations for that slowdown is pent-up demand after the recent recession.
"We, as economists, have recognized for a long time that every time the economy goes through a soft patch, whether it's a full-blown recession or a pullback in job creation, people postpone purchases of big-ticket items, particularly durable goods," he said. "It's quite likely that we had a surge of consumption between 2010 and 2014 associated with satisfying some pent-up demand that was created between '07 and '10."
The other explanation is "we're seeing a pullback because the consumers are getting tired," he said. "When consumers get tired, big ticket items show it first. So there's some possibility there."
But finding those explanations got much tougher after Hurricanes Harvey and Irma came through, he said.
"It's very interesting. We're now going to have a period of anywhere from four to eight months where we're going to have elevated sales patterns trying to replace automobiles that were destroyed," he said.