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Fifth consecutive quarterly drop in customer satisfaction points to weak growth

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Fifth consecutive quarterly drop in customer satisfaction points to weak growth

Index falls to lowest point since 2006.

Customer satisfaction with goods and services purchased and consumed in the United States suffered a fifth consecutive quarterly decline in Q1, sending the American Customer Satisfaction Index to its lowest point since 2006.

According to the ACSI, the national level of customer satisfaction is down 0.7% to 74.7 on a 100-point scale in the first quarter of 2015, and is off 2.7% since peaking in the fourth quarter 2013. The sustained downward trend in aggregate customer satisfaction dampens consumer demand and forecasts continued economic malaise.

"With declining customer satisfaction, increased demand and strong economic growth will be hard to come by."

"With declining customer satisfaction, increased demand and strong economic growth will be hard to come by," says Claes Fornell, ACSI chairman and founder. "Lower customer satisfaction puts a damper on aggregate consumer discretionary spending as companies aren't doing enough to stimulate demand. Recent retail sales and jobs data are hardly representative of a buying splurge."

A small increase in wages may leave households with more discretionary income, but slipping productivity may be causing more workers to be hired. The paradox is that an increase in productivity, which has been lagging for some time, may slow hiring. Without strong consumer demand, productivity can actually have negative short-term effects in the way of a softer job market, which could lead to an uptick in unemployment and less discretionary household income. Strengthening customer satisfaction is an important factor in encouraging consumer demand.

"Unless companies do more to increase customer satisfaction, higher wages alone will not be enough to stimulate consumer spending, which is a driving force in the economy," says Fornell.

Assuming no short-term change in other factors, the ACSI data point to continued slow consumer spending growth of 2.0-2.6% for the second quarter, which is not enough for a healthy economy. 

 

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