Discretionary income has been quite the buzz word these days. According to investopedia.com, discretionary income is described as "the amount of an individual’s income that is left for spending, investing or saving after taxes and personal necessities (such as food, shelter, and clothing) have been paid… includes money spent on luxury items, vacations and non-essential goods and services." In other words, if you are involved in a business that caters to wants versus needs, the current state of discretionary income is very important to you.

I talked to a few business owners and they have said business is slow, down or not what it used to be. I talked to a few others that say business is picking up. I attended two ribbon cuttings for brand new businesses in the past month. Both were well attended by supporters and paying customers. All of the above businesses cater to wants and compete for discretionary dollars. Now I sit here and try to line up what seems to be conflicting data.

The truth is, as a country, research shows discretionary income is up. In November, a report from The Conference Board, the same organization that produces the Consumer Confidence Index, showed that households with discretionary income numbered at 73 million. This was up from 52 million in 2002. So there should be people chomping at the bit to spend money. Not quite.

Remember that Consumer Confidence Index I just mentioned? Let’s talk about that for a minute. The Consumer Confidence Index is based on several factors and uses the year 1985 as a benchmark equaling 100. One year ago, the Index was at 112.6. That was the highest level it had been in the past six years. Remember last year? The average price of gas was under three dollars, we weren’t sure what was really going on with the housing market and we weren’t on the cusp of electing a new president. Those types of tumultuous situations wrapped up in a 24 hour media cycle will get in your head, the consumer’s head, quick.

So, 12 months ago the index was 112.6. Last month, it rang in at a whopping 50.4. Don’t grab a calculator, I’ll go ahead and confirm that is less than half of what it was just 12 months ago. I am not an economist, but I am willing to bet it doesn’t take one to figure out that a drop like that will war against any increase in discretionary income. Again, I am not an economist, but logic says that if you have money left over after the bills are paid, but you aren’t sure if that money is going to be there again next month, that extra money doesn’t feel so "discretionary."

Now we have to translate that into what this data means to the business owner. First, and most importantly, it means the money is out there. However, you are probably going to have to work a little harder to get at it. You are going to have to know your market, the problem you solve for that market and how to tell them you solve it. You have to know that your value added services – customer care, follow up, loyalty benefits and the like – are all up to speed.

Second, you have to know where the money is. The short answer to that question is baby boomers. The more detailed answer is that baby boomers account for 60 percent of the 73 million households with discretionary income and Generation X comes in a distant second. The bulk of the 73 million live in the Northeast and California. Not so great if you are operating a business in coastal Georgia. Unless, of course, you can look deep into your marketing plan and find a way to reach and service those people.

Last, but certainly not least, you have to be confident that your product or service benefits those who spend money on it. If consumer confidence is low, your business confidence has to counteract that. But again, I am not an economist, so I’d love to hear what you think.

April Groves covers all things business for the Bryan County News. You can send thoughts, press releases, tips and questions you’d like answered to agroves@bryancountynews.