American Customer Satisfaction Index: U.S. economy is ‘fragile’
Things aren’t always what they seem to be at first glance, including the economy.
That’s according to a new American Customer Satisfaction Index report, which noted that GDP growth last year was weaker than its 25-year average. Given record low unemployment and a strong stock market, it is understandable why many commentators in the media are praising the “strong economy,” the report stated. But a look beyond employment and the stock market provides a different picture.
“Even the employment numbers are not as strong as they seem considering the low labor participation rate,” the report said. “While the rate has shown a slight uptick recently, a large number of people have given up looking for work compared with what was the case in the past.”
At the same time, the decline in U.S. customer satisfaction continued in the final quarter of last year, falling 0.4% to a score of 75.4 (on a scale of 0 to 100).
“The U.S. economy is far from strong or robust,” said Claes Fornell, founder and chairman, American Customer Satisfaction Index. “The sum of the goods and services that are purchased by the final user – for whom the American Customer Satisfaction Index measures satisfaction and GDP measures the monetary value – is in decline. GDP growth, at 2.1% in 2019, is weaker than its 25-year average.”
Also, while U.S. GDP growth is stronger than in the eurozone, the current account balance is negative in the U.S., while positive in Europe. The federal debt is also rapidly increasing in the U.S., having passed $23 trillion. Under these circumstances, it is especially difficult to argue that 2.1% GDP growth is strong, according to the report.
For the U.S. economy to be in good shape, GDP should have a growth rate of 3% or better. A growth rate of that magnitude implies that consumer spending, on average, would have to grow by about 4%. That’s a tall order, as it is currently less than 2% with customer satisfaction slipping and wage increases uncertain, according to the report.
The American Customer Satisfaction Index has been a national economic indicator for 25 years. It measures and analyzes customer satisfaction with more than 400 companies in 46 industries and 10 economic sectors, including various services of federal and local government agencies. Click here for more on the latest ACSI report.