American Consumer Satisfaction Slips, Portends Economic Woes

Aug.19, 2008 in Investment Opinions

DOW JONES NEWSWIRES

The American Customer Satisfaction Index edged down in the second quarter despite
big gains in online commerce, and the drop may signal more trouble ahead for the
world economy.

The index, produced by the University of Michigan’s Ross School of Business, fell
0.1 point to 75.1 on a 100-point scale, after a 0.3-point uptick in the first
part of the year.

“Declining customer satisfaction combined with weaker demand for U.S. exports may
make it difficult for American households to shoulder the burden of being the
locomotive for world economic growth,” said Claes Fornell, who heads up the ACSI
team at Michigan.

The researchers expect consumer spending to remain weak in the third quarter,
with growth of no more than 2.3%.

The bright spot on consumer satisfaction in the second quarter was in technology,
where Google Inc. (GOOG) continued to improve customer satisfaction score,
bringing other sites up along with it. The dominant search engine rose to a score
of 86, while Yahoo Inc. (YHOO), which has been distracted by a takeover bid from
Microsoft Corp. (MSFT), slid 3 points from last year’s score to 77. Another star
brand was Apple Inc. (AAPL), which defied general dissatisfaction with the
industry to rise 10 points above its nearest competitor in the personal-computer
category, to a score of 85.

Domestic auto makers, which are in the midst of the most serious slump in auto
sales in decades, lost ground against their European and Asian counterparts.
Toyota Motor Corp.’s (TM) Lexus and BMW AG (BMW.XE) led the industry in
satisfaction, while Chrysler LLC’s Dodge and Jeep brands brought up the rear.

Customers were less satisfied with their major appliances, with all three major
companies falling. Whirlpool Corp. (WHR) fell the most, to a score of 80: the
same level as General Electric Co. (GE) and Electrolux AB (ELUXY).

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