Words like variable and mixed are usually used to
describe the weather. These days, they can also be used to describe
the U.S. economy.
While the economy keeps growing overall, the combination of
rising gas prices, a static job market and a potential housing
bubble has left the U.S. consumer somewhat pessimistic. Consumer
confidence fell for the fifth straight month in May--the longest
consecutive decline since 2002. The Conference Board's
"Consumer Confidence Index," a monthly survey of 5,000
U.S. households, tumbled 6.3 points between March and April alone.
While the most recent figures from the survey indicate that
consumer confidence may be on the rise--the index rose more than 2
points between May and June--entrepreneurs aren't out of the
woods yet.
Americans aren't expecting the economy to derail, but they
do expect more of the same, says Lynn Franco, director of The
Conference Board's Consumer Research Center in New York City.
"We're getting mixed signals," Franco says.
"There's been economic improvement, but it hasn't been
steady."
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Mixed signals are no laughing matter for Chris Mazzilli,
co-founder of Gotham Comedy Club, a 9-year-old comedy club in New
York City with 35 employees and annual sales in excess of $1
million. The company offers comedy packages to corporations, and
Mazzilli, 40, sees more moodiness and less consistency in his
customers' buying habits. "They'll say, 'I
can't do what I did last year,'" he says.
Patrick Calello is the founder of Automoblox, a
Roseland, New Jersey, company that makes wooden toy car kits that
retail for $32 at FAO Schwartz, Neiman Marcus and specialty toy
retailers. Company sales this year will reach about $1 million. To
convince hesitant buyers, Calello, 34, peppers them with
Automoblox's success stories, offers them customer referrals
and gives demos. "We feel confident their experience with the
product will be positive," he says.
Entrepreneurs must stay confident if they want it to rub off on
consumers, says Craig Stokely, founder of The Stokely Partnership,
a Wayne, Illinois, marketing and research consulting firm
specializing in business growth. Entrepreneurs should have a strong
strategic plan, survey their customers regularly and listen
carefully for signs of sagging confidence. "Consumer
confidence will continue to go up and down," Stokely advises.
"The smart entrepreneur takes steps to deal with it."
Entrepreneurs will need a stiff upper lip: Sam's Club
surveyed 1,200 small-business owners in April and found only 45
percent felt confident the economy would get stronger by
November--a seven-point drop from the same survey last year.