Consumers are the driving force behind the health of small- and medium-sized retailers, so when Americans are feeling confident in the economy, it is a positive sign for businesses.
When sales levels pick up, there is a need for retailers to replenish stock, which can be difficult to accomplish on their own dime. Fortunately, inventory financing is available to retailers in need of assistance.
The Thomson Reuters/University of Michigan final index of consumer sentiment came hit 82.1 in August, down from 85.1 in July, which was a six-year high. The decline wasn't as bad as expected, as economists surveyed by Bloomberg called for a drop to 80.
The slight reversal in confidence can be attributed to higher mortgage rates, but levels still remain high.
"There was a good bounce in confidence a couple of months ago, and there has probably been a little bit of reversal in the last couple of months as mortgage rates have risen," Jim O'Sullivan, an economist at High Frequency Economics, told Bloomberg.
Higher confidence levels have translated into increased consumer spending in the past couple of months and that continued in July. According to the U.S. Department of Commerce, purchases were up 0.1 percent, following a revised 0.6 percent increase in June.
As spending picks up, retail sales could follow suit. To ensure shelves remain full, financial assistance may be needed. Inventory financing can provide small- and medium-sized retailers with the ability to purchase product when they can't afford to do so on their own.
This form of asset-based lending allows businesses to obtain a revolving line of credit, using current inventory as collateral, which can then be utilized to keep shelves full at all times.