COVID-19

As reopening falters, consumer confidence falls

Mitchell Hartman Aug 25, 2020
Heard on: Marketplace
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Customers walk past closed stores at a mall in Franklin, Tennessee. Consumer confidence has fallen yet again. Brett Carlsen/Getty Images
COVID-19

As reopening falters, consumer confidence falls

Mitchell Hartman Aug 25, 2020
Customers walk past closed stores at a mall in Franklin, Tennessee. Consumer confidence has fallen yet again. Brett Carlsen/Getty Images
HTML EMBED:
COPY

Consumer confidence has fallen — again.

This is the latest gauge of American consumer attitudes taken by The Conference Board think tank. For August, its Consumer Confidence Index came in at 84.8 — below expectations and down from 91.7 in July. It was down quite a lot from June — 98.3 — when there was a fair amount of optimism building among consumers as the economy reopened and some folks were called back to work.

But the summer surge in COVID-19, states pausing their reopenings, schools starting virtually and gridlock in Washington over extending unemployment benefits — it’s all taking a toll on the American consumer.

Economist Lynn Franco at The Conference Board said consumers are getting more pessimistic about their economic situation.

“That cloud of uncertainty seems to be covering the majority of consumers,” Franco said. “There’s not much of an expectation that business conditions or employment are going to improve, and we’ve actually seen consumers grow a little bit more negative about their financial well-being.”

Consumers are still hesitant to return to their favorite pre-pandemic places and pastimes to spend money. Joanna Piacenza at polling firm Morning Consult said that’s largely due to the mid-summer spike in COVID-19 cases.

“Consumer comfort with doing these activities — going to the movies, going to the gym, going to a concert — that dropped down roughly one-third. And it hasn’t budged since,” Piacenza said. “It’s been about nine weeks of no movement.”

That fits the experience of 26-year-old Jessica Montoya of Portland, Oregon. She was picking up a takeout breakfast this morning near the open-air fruit stand where she works.  I asked how she feels about dining in.

“Not entirely comfortable yet,” she said. She’s done it once since local COVID-19 restrictions were lifted in June. 

“You wear your mask to go sit down, but it seems like after that you’re just not wearing the mask,” Montoya said. “So in my head, it somewhat defeats the purpose.”

Morning Consult found the number of consumers who feel comfortable dining out at restaurants has fallen 10 points since May to just 31%

COVID-19 Economy FAQs

Are people still waiting for unemployment payments?

Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.

Are we going to see another wave of grocery store shortages?

Well, public health officials are warning that we could see a second wave of the virus before the end of the year. And this time retailers want to be prepared if there’s high demand for certain products. But they can’t rely totally on predictive modeling. People’s shopping habits have ebbed and flowed depending on the state of COVID-19 cases or lockdowns. So, grocers are going to have to trust their guts.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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