The national level of consumer satisfaction exhibits strong growth as the American Consumer Satisfaction Index (ACSI) gains 1.9 percent to a score of 76.8 on a 100-point scale. The upswing follows a series of sharp drops that occurred between 2014-15, and matches the previous high mark registered in the fourth quarter of 2013.
“If we think about how customer satisfaction affects consumer spending, just visualize the standard demand diagram with quantity on the vertical axis and price on the horizontal axis,” says Claes Fornell, ACSI Chairman and founder. “The demand curve in the diagram has a negative slope, which indicates how sensitive consumer demand is to an increase or decrease in price. Now, how does an increase in customer satisfaction come into play with respect to consumer demand? The answer is that it shifts the demand curve upwards, which means that demand increases if prices stay the same.”
Fornell adds that ACSI downturns followed immediately by increases have occurred in the past, but they have usually been less pronounced. The most similar rebound in scope and magnitude occurred in 2005, and was followed by a period of prolonged growth in consumer satisfaction. Overall U.S. customer satisfaction reached an all-time high in the fourth quarter of 2013, and as a result, consumer spending in 2014 and 2015 grew at the highest annual levels since before the Great Recession.
Alternatively, Fornell says price increases have less of a negative effect on demand than would be the case if customer satisfaction had not increased. Since there is still very little evidence of inflation in most markets, he expects consumer spending to increase. Additionally, because consumers account for about two thirds of the economy, the rate of GDP growth should increase as well.
Licensed by the University of Michigan, the ACSI is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. The company uses data from interviews with more than 180,000 customers annually as inputs to an econometric model for analyzing consumer satisfaction with more than 300 companies representing 43 industries and 10 economic centers.