Consumer confidence dips with spread of COVID-19
Consumer confidence steeply declined over the past month, the fourth biggest one-month drop in nearly 50 years, as the novel coronavirus spread and the United States reacted with social disruptions and shut-downs across sectors.
Sentiment dropped 11.9 index points in March, from 101.0 to 89.1, according to the University of Michigan. Confidence is likely to get a lot worse, and could reach levels last seen in the Great Recession.
Richard Curtin, chief economist on Michigan’s survey, wrote “stabilizing confidence at its month’s end level will be difficult given surging unemployment and falling household incomes.”
Early this year, consumer confidence was nearly the highest it’s been in a decade. Then COVID-19 hit.
“When all of these sporting events were cancelled and there was news of different celebrities contracting the virus, consumers turned extremely pessimistic,” said John Leer at Morning Consult.
Leer says Morning Consult’s survey show confidence is down 24% in the past month. Some of that’s from all the job losses. And Leer says people increasingly fear for their financial security.
“Roughly 50% of U.S. households own stocks, so when the stock market falls, that’s hitting their retirements directly,” Leer said.
The Fed and Congress plan to inject trillions into the economy, and Mark Hamrick, senior economic analyst at Bankrate, says that’ll buck up consumers.
On the flip side: “If we see a substantial number of storefronts that are shuttered that’s going to undermine our sentiment,” Hamrick said.
He says keeping employers afloat until they can start hiring again is key to an eventual consumer rebound.
COVID-19 Economy FAQs
What’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?