MTSU survey shows rising gap in economic optimism between businesses and consumers

In an ideal world, both businesses and consumers are happy about the economy and their potential growth.  

But a recent survey from Middle Tennessee State University found that businesses are more optimistic about the economy than consumers, and both parties are cautious about the future. Those are some of the findings in MTSU’s latest Tennessee Consumer Outlook Index. 

Dr. Michael Peasely, marketing professor and director of the consumer research institute at MTSU, said we’re experiencing a “K-shaped economy” where high-income business leaders are thriving but consumers are struggling.  

“When you have business leaders that are continuing to earn higher wages just naturally by their positions and their jobs… that feeds into their optimism,” Dr. Peasley said. 

“Conversely, consumers have to deal with inflation and all this pricing pressure over time. Spending is tougher, and so they’re much more pessimistic.”  

 Peasley has been leading research for the Consumer Outlook since 2022, with the goal of providing insights to Tennessee business leaders and consumers about perceptions of the economy.  

This data not only informs the public on how the state’s economy is perceived, it also helps businesses look at the market from a consumer’s perspective and adjust their strategies. 

“I think they’re realizing that consumers are still a little pessimistic on the economy, and so they’re trying to keep prices a little lower. They’re being more conservative with price increases now over the last year, and they’re still continuing to invest and find ways to save money or to expand their business,” Dr. Peasley said. 

Despite consumer struggles, the survey found that those who reported worse financial situations dropped from 49% to 32%.  

Dr. Peasley believes that has less to do with conditions improving and more with consumers’ acceptance of higher prices.   

“I was honestly surprised that there was even a bump at all on the consumer data, that the positivity went up a little bit, even though we’re still in negative levels, just with everything going on between the war and in the economy and gas prices,” he said.  

The Iran war had just begun in February when Dr. Peasley and his team started compiling the data 

So while he expects consumer pessimism to rise as the war continues, he says Tennesseans are able to be resilient due to the state’s job growth, which is higher than the rest of the country.