The LegalShield Law Index indicates that Q4 may be more challenging than previously predicted. The latest index continues to signal that consumer confidence will soften over the remainder of the year, as it did in September. A key component of the Law Index — the Consumer Financial Stress Index — edged up (worsened) from 90.4 to 90.8 last month following a 3.4 point increase in August, while both the Conference Board’s Consumer Confidence Index and the University of Michigan’s Index of Consumer Sentiment eased.
“As our data have led us to expect, separate measures of retail sales released in August by the U.S. Department of Commerce and the National Retail Federation both declined, and inflation-adjusted consumer spending also fell,” commented James Rosseau, LegalShield’s chief commercial officer.
“While time will tell, the LegalShield data, based on demand for legal services, indicate that retail sales and other consumer activity may fall short of expectations this holiday shopping season.”
Though consumer finances are generally healthy, there remains a noteworthy divergence between LegalShield data and the Conference Board’s Consumer Confidence Index. Historically, when these two indices diverge, it is typically Consumer Confidence that moves into line with LegalShield data, as evidenced in the run-up to the 2008-09 recession.
“Consumer spending accounts for a huge portion — more than two-thirds — of the U.S. economy,” Rosseau said. “Although we’re not expecting a poor retail season ahead, decision makers who are counting on a banner year for retail spending might be disappointed.”