Consumer sentiment has been struggling in recent months, particularly as unemployment remains high and wage gains are stifled. But will it cause the U.S. economy to fall back into recession?
That is the conclusion of a report released this week by Bank of America Merrill Lynch, which found the likelihood of a downturn to be greater than 80 percent. The analysis also reflects the impact of the U.S. and European debt crises, as well as stock market volatility.
But it's the slow recovery of consumer confidence that has been most troubling, especially as spending in this sector accounts for roughly 80 percent of the U.S. economy.
"More timely consumer and business sentiment indicators dropped in August in response to a range of bad news," Michael Hanson, an economist at the firm, told MSNBC. "While we concede the risks are rising, a recession is not baked in the cake. If the economy can avoid further shocks, we would expect a modest bounce in growth into the end of the year."
Retailers can protect their operations by leveraging research and marketing practices that help analyze consumer demand and service tactics for a troubled marketplace.