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12/20/2013 - Survey finds link between gas prices and consumer sentiment


For much of the year, there's been an inverse relationship, meaning that when gas prices go down, sentiment goes up and vice versa.

With Christmas only days away, economists have indicated that consumer optimism has been especially robust, which should portend well for business owners, this after three straight months of pessimistic sentiment in the fall.

What explains the lift in spirits among Americans? A recent poll suggests it may be the trend of gas prices.

According to the National Association of Convenience Stores, which performs a monthly poll among drivers to get their take about gas prices, throughout the past year, there's been a correlation between the cost of fuel at the pump and consumer sentiment. For much of the year, there's been an inverse relationship, meaning that when gas prices go down, sentiment goes up and vice versa. And, for the past several months, when asked to predict what direction the price of fuel will go in the coming days, more people have thought that they'll fall rather than increase.

Gas price expectations changed sharply since summer.  For example, in November, just 43% of consumers said that they believed gas prices would be higher 30 days from that time period. That's a major decline from July, when nearly two-thirds forecasted that they would rise a month from then.

"Changes in gas prices clearly play a critical role in affecting consumer sentiment," said John Eichberger, vice president of NACS. "Gas prices have decreased more than 35 cents per gallon in the past three months and we are happy to see that positive news at the pump is having a great impact on consumer optimism."

It appears as though entrepreneurs tried to take advantage of this improved sentiment heading into the holiday season. Prior to Small Business Saturday, (which is held every Nov. 30), close to 70% of managers polled said they planned to offer deep discounts on merchandise in order to drum up demand, according to the National Federation of Independent Business. Future analysis will help determine if business owners held true to that stated intention.

Though it may be a busy time of year, the holiday season is a good time to review one's business owners insurance policy. Because right around now is usually when activity is at its peak, it can give entrepreneurs an idea of how much coverage they'll need when liability is at its height.


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