Consumer confidence hits nine-month low to begin April

Consumer confidence continued to fluctuate in the first week of April, as it hit a nine-month low after rising to end March. Wavering confidence among American consumers could lead to an uncertain future for small- to-medium sized retailers. 

Should these businesses see cash flows fall below normal levels because consumers aren't spending money at retail stores, the next couple months could be a struggle. However, inventory financing is available to help get retailers through these potentially difficult times. 

With consumers becoming more pessimistic about the outlook for the economy, the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 72.3, down from 78.6 in the previous month. This drop was rather unexpected, as the reading was lower than the estimates of all 69 economists surveyed by Bloomberg, who called for no change from March. 

The decline in confidence can potentially be attributed to lagged effects of higher payroll taxes, but Bloomberg said stock prices hitting all-time highs and rising home prices could help improve household finances and prevent a major dip in retail spending. 

"If this weakness persists, then I think it will likely temper spending in coming months," Millan Mulraine, director of U.S. rates research at TD Securities USA told Bloomberg. "The rollback on payroll taxes is beginning to have an impact on consumer spending activity and consumer confidence."

If rising stock and home prices are unable to cancel out falling consumer confidence, small- to-medium sized retailers could enter a period where cash flows could lag. During these periods, it could be a struggle to obtain a loan from a bank, but inventory financing could still be an option. 

Qualifying businesses can take advantage of this form of asset-based lending to obtain a revolving line of credit, which can help retailers replenish inventory and continue operating at normal levels while cash flows are lagging.