Consumer confidence has collapsed amid the coronavirus pandemic and isn’t getting a lift from states re-opening their economies, according to nationwide surveys.
Daily surveys of more than 6,000 Americans by Morning Consult shows that consumers started to sour on the economy before state shutdown orders. Lifting those restrictions hasn’t boosted their confidence. And consumers’ views track more closely with nationwide developments rather than those in a particular state, the data show.
“If you think about what it’s going to take for the U.S. economy to rebound, it’s going to take some sort of 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. The collapse was highlighted earlier this month when federal data showed that retail sales fell by a record 16.4% from March to April. 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, which has infected more than 1.6 million Americans, killing close to 100,000.
But the findings from Morning Consult, a data intelligence company, 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.
The Morning Consult Index of Consumer Sentiment scores are based on answers to five questions that consumers are asked during more than 6,000 daily interviews. The state-level data use a 30-day rolling average and it is weighted to age, gender, education, and race/ethnicity, among other demographics.
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.