Early signs of an improving economy, but consumers haven’t opened their wallets
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It’s confirmed: The bottom fell out on consumer spending during sheltering in place April. The government says spending fell 13.6%. Meanwhile, the personal savings rate hit a historic 33% in April, up from 12.7% in March.
For May, there are signs spending may be picking up slowly. Consumers are now feeling slightly more confident about the economy overall. The University of Michigan’s index for May, however, shows consumer sentiment has remained largely unchanged.
And people’s anxiety about their own personal finances is still sky-high, says economist John Leer at polling firm Morning Consult.
“Millions of Americans have filed for unemployment insurance, it’s unclear whether or not those workers are still able to meet their basic spending needs,” Leer said.
And Leer says about half of those who’ve lost jobs or had their hours cut, aren’t even getting benefits.
Heidi Shierholz at the Economic Policy Institute says that’s sapping confidence, too.
“That means that they are trying to subsist on much lower income. They’re going to have to cut their spending and it will make the recession worse,” Shierholz said.
Consumers remain very concerned about COVID-19 continuing to spread. As a result, “we will not see any sort of a rebound in consumer spending in the near-term,” Leer said.
That’s at least until consumers are more willing to go out to dine and shop again.
COVID-19 Economy FAQs
New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?
Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
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