Consumer Confidence Inches Up With Stimulus, But Wage Insecurity Looms
A new spate of stimulus checks may have given the public some sense of hope for the future.
Although measly relative to the millions of jobs lost and the overall effect on the economy, the $600 or so that appeared in many Americans’ bank accounts — or were due to — since a new coronavirus pandemic relief and stimulus package was approved Dec. 27 caused Morning Consult’s consumer confidence trackers to tick up.
The research firm said its Index of Consumer Sentiment is up 1.5 points week-over-week to 87.7 on a scale of roughly 120. At the same time last year, consumer confidence was at 113. According to the Organization for Economic Co-operation and Development, consumer confidence metrics below 100 represent “a pessimistic attitude towards future developments in the economy.”
The recent increase Morning Consult measured comes immediately after passage of the second CARES Act, which included the $600 direct payments. The payments came much quicker than the single previous round in March of direct relief to the public, leading to the quick confidence uptick, the firm said. In March, $1,200 checks were mailed and millions took months to receive. So many people did not receive them at all that the Internal Revenue Service said recently those who did not will be able to file a claim for the payment on their 2020 tax returns.
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Longer term, Morning Consult sees consumers feeling a bit better, still, as January should see more Americans receive their stimulus checks and more federal unemployment payments. This could lead to a slight increase in consumer spending and demand for workers. But much depends on how the pandemic is handled going forward and how the incoming presidential administration of Joe Biden deals with what’s so far been a messy vaccine rollout and a continued lack of federal mandate to control the pandemic. The U.S. currently has the most reported cases of the coronavirus in the world, with more than 20.6 million cases and more than 350,700 related deaths.
Unemployment rates and wage losses have remained steep during the course of the pandemic. John Leer, an economist at Morning Consult, said data shows that over the last week, 18 percent of adults “experienced a loss of pay or income,” an increase of 3 percent from November.
“That figure paints a clearer picture of Americans’ personal finances beyond unemployment claims, as the demand for labor continues to weaken,” Leer said.
In December, other trackers said consumer confidence dropped, as the virus surged in many states, leading to all-time highs of infections and related deaths. The OECD showed a drop of 1 point in U.S. consumer confidence to roughly 98 points, leaving sentiment in “pessimistic” territory. A year ago, consumer confidence was close to 102 points.
Similarly, The Conference Board, a non-profit business research group, also said consumer confidence dropped in December, to 88 from 93 in November. Twenty-two percent of consumers said jobs are “hard to get.” But looking ahead to the next six months, consumers are slightly more optimistic, with 29 percent expecting business conditions to improve, up from 26 percent the month before.
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