Consumers are starting to worry about COVID-19’s economic impact, survey finds
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U.S. and foreign financial markets have fallen hard this week, as COVID-19 continues to spread to more countries in Asia, Europe and the Middle East, and investor fears mount that the growing epidemic will have a significant negative impact on the global economy.
A new consumer survey released today by Morning Consult finds that U.S. consumers are starting to take notice as well.
Before today’s report, there had been little evidence the epidemic was impacting U.S. consumer sentiment and willingness to spend. On Tuesday, the Conference Board reported that consumer confidence rose in February to a six-month high, driven by solid job growth, low mortgage rates and falling gasoline prices. Consumers’ plans to buy autos, homes and major appliances within the next six months all improved.
The Morning Consult survey, fielded Feb. 17-23, just before U.S. markets started plummeting, finds that consumer confidence has fallen back to approximately the level at the start of 2020. The decline is about half as big as occurred when U.S.-Iran tensions flared up in mid-January, and confidence is still higher than at the height of U.S.-China trade tensions last summer.
“For many consumers, the issue of coronavirus is still outside of their daily lives,” said Morning Consult economist John Leer. “Very few consumers believe that coronavirus will affect their local economy. But as you ask about broader economic regions — like the United States, China, the globe — the number increases.”
People involved in the agriculture sector express the most worry about COVID-19’s impact, said Leer — concerned that the extensive disruption in China will prevent China from buying as much U.S. crop exports as was promised in the Phase One trade deal. Workers in finance and transportation also expressed heightened concern about coronavirus.
“We see that consumer sentiment is highly correlated with the S&P 500 and investor concerns over time,” Leer said. “It wouldn’t be surprising if in the near term, consumers’ outlook of the macroeconomy started to take a hit prior to their views of their own personal financial conditions.”
Senior U.S. health officials told a Senate panel on Tuesday that it’s likely COVID-19 will spread within the U.S. eventually. “We cannot hermetically seal off the United States to a virus,” said Alex M. Azar II, secretary of health and human services. “And we need to be realistic about that.”
Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases, called for American consumers, businesses, and health care providers to begin to prepare for “social distancing measures” to contain the epidemic, such as closing schools, canceling meetings and conferences, and arranging for employees to work from home.
President Donald Trump, however, downplayed the risk to the U.S., saying on a trip to India that the coronavirus epidemic is “very well under control in our country,” and that infected patients who have returned to the U.S. from abroad “are getting better, they’re all getting better.””
And Larry Kudlow, director of the National Economic Council, said on CNBC that coronavirus had been “contained.”
“I don’t think it’s going to be an economic tragedy at all,” Kudlow said.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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