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Divining Consumer Intent: Reading Tea Leaves?
By Vijay Dandapani
Thursday, 1st September 2011
Major property damage, thousands of canceled flights and some opportunistic price-gouging by a few merchants including hotels in the wake of Hurricane Irene all likely did nothing for consumer confidence.

Yesterday's Wall Street Journal report noted that "on Friday, a monthly survey of consumer sentiment put out by the University of Michigan showed confidence among consumers is at its lowest point since November 2008—the depths of the recent recession." 

The Journal article goes on to grimly note that "two-thirds of those surveyed said the economy is deteriorating; many were putting off plans to buy cars and other big-ticket items." Also being shafted are discretionary expenses like cruise trips and hotel stays with one interviewee in the article choosing to stage a large family reunion at home instead instead of a cruise.

Nevertheless, the WSJ article does quote economists as saying that many of those "fears are overblown and note that how consumers actually behave doesn't always match how they say they feel.

Employers have added workers for 10 consecutive months through July and wages have been rising gradually. (Further) orders for long-lasting goods such as cars and airplanes have been picking up. The recent drop in oil prices should provide a boost to both consumers and businesses."

Along those lines another report  quotes the Direct Marketing Association (DMA) which recently released its Quarterly Business Review (QBR) for the second quarter of 2011.

DMA partnered with Winterberry Group on the report, a leading strategic management consulting firm that helps advertising and marketing companies build shareholder value.  econd quarter of 2011, marketers reported moderate growth in spending, sales, profits and staffing, compared with the previous quarter (Q1 2011) and same quarter last year (Q2 2010).

Among the positive signals to be gleaned from the DMA's quarterly review is news of investment in direct/digital marketing activity growing or remaining steady compared to the previous quarter and over one third of marketers surveyed (35.6 percent) indicated that profitability increased as compared to the last quarter.

Regardless, the semiotics (study of signs) of consumer behavior is one thing but inferring economic intent from that is quite another particularly in a see-saw post-08 economy. All of wihch makes setting '12 budgets a daunting task.

Vijay is Chief Operating Officer and part-founder of Apple Core Hotels- a chain of 5 midtown Manhattan hotels offering value and comfort in the heart of the city.Member of the board of Directors - Hotel Association of New York.
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