Does Improvements in Consumer Sentiment and GNP Indicate Future U.S. Growth?

The University of Michigan recently announced improvements in consumer sentiment from 80 in March to 84.6 in September (1).  Consumers who have been frugal with their pay checks over the past may now be willing to open their wallets. Increased consumer spending matched with improvements in Gross National Product (GNP) could be a good sign for the economy. 

Consumer sentiment and sales are two different things but certainly positive impressions today can lead to increased sales tomorrow.  According to Gelper, et. al. (2007) positive consumer sentiment is followed by increased purchases of products and services in the trailing 4-5 months. They argue that consumer sentiment maintains some predictive power over consumer spending. 

Another complementary announcement by the Commerce Department posted a rise in Gross Domestic Product (GDP) to 4.6% (2).  Positive GNP numbers were realized from personal consumption expenditures, exports, private inventory investment, state and local government spending, nonresidential fixed investments, and residential fixed investments.  

Consumer sentiment does have an impact on GDP. Negative consumer sentiment can lower GNP and positive consumer sentiment can raise GNP even though they are not associated with traditional market fundamentals (Matsusaka & Sbordone, 1995).  Contrary to popular opinion, consumer sentiment is strong enough to influence a 13 to 26 percent variance in GNP. 

Together these numbers support the idea that growth in consumer spending is more likely over the next few months. A short lag is not necessarily a bad thing if consumer spending also prompts American manufacturers to invest more in their operations to fulfill consumer needs and further strengthen GNP. It is possible that long-term exports could rise as U.S. based companies find parity with low cost foreign providers. 

Gelper, et. al. (2007). Consumer sentiment and consumer spending: decomposing the Granger causal relationship in the time domain. Applied Economics, 39 (1). 

Matsusaka, J. & Sbordone, A. (1995). Consumer confidence and economic fluctuations. Economic Inquiry, 33 (2).

Moving Beyond Service-Dominant Logic to Include Change

Service related add-ons can raise the value of products while encouraging higher levels of customer satisfaction. A paper by Lusche & Spohrer discusses the service-dominant (S-D) logic as a science that encourages systems-level thinking and provides greater value propositions. The development of service related products alleviates many human-oriented problems in business and government entities.  Thinking about service requires moving beyond the obvious to incorporate difficult to account for complexity.

Improvement comes with a level of chaos as we learn that we are interconnected and influenced by a complex system of people, events, and actors. S-D logic helps us understand how the underlying principles that foster growth and creation are not readily apparent. They are part of the fabric of our environment but when taken together create the totality of our economic system.  

Innovation changes the environment in a way that can encourage higher levels of functioning and interaction between business and customers. Sometimes this innovation is complex and at other times it is small and adjustable. Change is the process of generating new solutions to existing processes and enhancing smooth business functioning through continuous adjustment. 

Current institutional logic works well when the market is simple and stable. Business and marketing management is focused heavily on analysis, planning and control but are not optimum when the environment changes. The process of strategizing is based upon fixed market assumptions that don’t regularly leave enough room for unexpected adjustments. 

It is important to consider the adjustments in business development as the business changes and adapts to its environment. When new products and services make their way onto the market they naturally create change among the economic actors who seek to maximize their earning potential. We can see this occur in the development of stronger and more reliable cell phones that incorporate apps to enhance their functionality. 

All service development should think about strategy beyond the here and now and leave enough flexibility within the strategic decision-making process to adjust to changes and new developments as they occur. This requires openness to new information that can help a strategy adjust as that new information becomes relevant. Providing for some level of contingency planning of most likely change scenarios can be beneficial. 

Lusch, R. & Spohrer, J. (2012). Evolving serve for a complex, resilient, and sustainable world. Journal of Marketing Management, 28 (13-14).

Healthy Living: Lentil Soup as a Body Scrubber

Lentils are considered a super food that does more for the body than most other food types combined. As a legume, lentils are one of the easiest beans to prepare and can go a long way in keeping your body fully stocked with energy producing fiber.  Cooking lentil soup allows the intake of natural nutrients along with a great way to satisfy hunger throughout the day. 

Lentils lower cholesterol and improve heart health (1).  The higher volumes of soluble fiber lower cholesterol and reduce risks of heart disease and stroke by scrubbing arteries. The soluble fiber develops a gel-like substance in the digestive tract and collects bile that contains cholesterol and pushes it out of the body (2). 

We know that protein is important for encouraging muscle strength. Lentils not only provide protein (18g per cup) but also stabilize blood sugar levels helping keep insulin from bouncing around (3). The slow release of nutrients and fuel acts as a buffer against quick shots of blood sugar that helps maintain weight.

Bowl 309 calories

Ingredients:

-2 cups of lentils

-4 cups vegetable or beef broth.

-1 medium diced onion

-4 cups water

-3 celery stalks sliced

-1 large diced tomato

-2 carrots sliced

-2 garlic cloves or garlic salt

-Black pepper and oregano to taste.

Directions:

-Soak lentils in water for 2 hours to soften and then drain.

-Stir lentils and all other ingredients in slow cooker. Cook on medium heat for 8 to 10 hours.

Book Review: Hidden in Plain Sight Offers Easy to Understand Physics

Physics isn’t the most popular book topic people gravitate towards when looking for a subject worthy of reading. Hidden in Plain Sight by Andrew Thomas provides a broad overview of modern physics. Even though the topics can be quite complex to lay readers this book has simplified the principles so that seemingly complex topics are covered parsimoniously.

Two theories have dominated physics for more than a century. General relativity and quantum mechanics have allowed scientists to explore the universe with satellites and has led to new momentum in the space race. The two theories have not been well connected in literature.

General relativity explains how objects relate to each other in space as well as the influence of gravitational forces on the movement of those objects. Quantum mechanics helped scientists develop the laser, computers, and other high processing products. It is possible to argue that general relativity is about big things while quantum mechanics looks at little things.

Quantum mechanics tells us how particles behave and how they influence each other on a miniscule scale. The problem is that in physics all particles and objects are relatively the same and should be following similar rules. Whether one is looking through a microscope or a telescope the same principles should be at work based upon the type of elements involved.

In Quantum mechanics everything in the universe is connected to everything else. They may seem like they are separate but that is not the case. Two particles may work together in unison in a system that develops its own unique attributes. Some objects may have distance between the elements but can still influence each other in a more complex arrangement.

As knowledge and research develops people become aware of how elements work together to create the whole. The book will work through concepts such as unification, universe, space, time,quantum reality, observation, rationale and what we can’t see. It provides an overview of the link between relativity and quantum mechanics by leading readers through present knowledge. 

Thomas, A. (2012) Hidden in Plain Sight: The simple link between relativity and quantum mechanics. [Kindle Edition].