Consumer confidence has collapsed amid the coronavirus pandemic and isn’t getting a lift from states re-opening their economies, according to a new report.
A Morning Consult survey shows that consumers started to sour on the economy before state shutdown orders. Lifting those restrictions hasn’t boosted their confidence. Consumers’ views track more closely with nationwide developments rather than those in a particular state, the data show.
To make the economy rally, it’s going to take a “change in health outcomes at the national level, even for various states to start seeing a rebound in consumer spending,” said John Leer, a Morning Consult economist.
Consumer spending drove the U.S. economy before the coronavirus crippled it, representing more than two-thirds of economic output. From March to April, federal data showed that retail sales fell by a record 16.4% signaling the collapse. With nearly 40 million Americans seeking unemployment benefits, state governments are under increasing pressure to ease restrictions on businesses that were meant to slow down the virus.
But the findings from Morning Consult suggest that reopening economies alone won’t pry open consumers’ wallets. The surveys showed that consumers were already losing optimism by March 19, before any states issued stay-at-home orders. Similarly, confidence stabilized across most states in mid-April, before the first states began reopening their economies.
Leer said three conditions are needed for consumers to start spending again: stores need to open, consumers must feel safe entering those places, and they need the money to make purchases.
“Reopening economies or reopening shops addresses that first criterion, but it doesn’t necessarily satisfy the latter two,” he said.
Consumer sentiments have stabilized recently but are still well below levels seen in March. In Pennsylvania, consumer confidence fell 34.3 points between March 1 and May 15 when it sat at 80.5. Economic outlooks dropped 32.5 points to 79.3 in New Jersey. Confidence levels in New Jersey and Pennsylvania were among the lowest in the country, ranking 13th and 14th from the bottom, respectively.
The Conference Board recently released its own measure of consumers’ assessments. It reported that U.S. consumer confidence has stabilized but continues to be at its lowest in nearly six years. The group’s confidence index hit 86.6 in May, up slightly from 85.7 in April — but down from 130.7 in February.