Consumers are spending money. The latest Consumer Confidence Index reveals that Americans remain skeptical about future conditions, but overall, data says clients are willing to spend—just maybe not on remodeling.
Tensions Add to Fears
The most recent index, released by The Conference Board on October 31, points toward a weakened view of the economy.
And with upcoming elections and global conflicts, more concerns have emerged.
“Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular,” said The Conference Board Chief Economist Dana Peterson, in the official release. “Consumers also expressed concerns about the political situation and higher interest rates. Worries around global conflicts also rose, amid the recent turmoil in the Middle East.”
Consumers Remain Negative... but Report Steady Finances
Negativity reigns amongst consumers for business conditions, with just 16.5% expecting business conditions to improve and 20.2% expecting conditions to worsen.
For short-term income prospects, 15.6% of consumers expect their incomes to increase and 13% expect a decrease.
But despite concerns, an increasing share of respondents reported a “good” current family financial situation. This comes after a decline from July 2023 through September. “This suggests consumer finances remain buoyant in the face of elevated inflation,” said Peterson.
On a six-month basis, more consumers plan major purchases such as cars and appliances, yet fewer report the intent to purchase a home, likely because of high interest rates.
“As a remodeler, you’re competing with so many things today,” says Mark Richardson, noted author, speaker, and industry advisor. “You’re competing with their time, their splurges, and their work and lifestyle choices.”
One of those splurges is travel. A Forbes Advisor survey found 49% of respondents planned to travel more in 2023 than the year prior, and another 38% reported plans to travel the same amount. This is likely a holdover from when people were stuck at home during the pandemic.
How to Respond
The challenge of getting remodeling projects signed today is to sell yourself and your process, Richardson explains.
“Today more than ever you have to be a therapist, a financial planner, and a marriage counselor. You have to be willing to go deeper into the relationship.”
Part of that is helping skittish homeowners feel comfortable making a large commitment.
Richardson suggests walking prospective remodeling clients carefully through the process and outlining every step along the way.
He advises focusing more on bite-sized pieces at first and makes an analogy to other relationships, such as dating.
“Whether you’re getting a commitment for a preliminary design or a feasibility study, whatever term you want to use, all it is a next date,” he explains.
This allows homeowners who might feel overwhelmed by signing on to a large project to move forward more gradually.
“The decision of what they want to do is in sync with their comfort level,” Richardson says. “And the fact is, they are not comfortable with a lot of what’s going on right now. That’s causing them to be in a holding pattern.”