COVID-19 Resurgence Pushes Drop in U.S. Consumer Confidence

By Kerry Smith

Attitudes about current conditions fell sharply this month as the pandemic spread, but there’s hope for the future: The mid-2021 expectations index rose 3.2 points.

BOSTON –The Conference Board Consumer Confidence Index declined in December, after decreasing in November. The Index now stands at 88.6, down from 92.9 in November.

The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased sharply from 105.9 to 90.3. However, the Expectations Index – based on consumers’ short-term future outlook for income, business and labor market conditions – increased from 84.3 in November to 87.5 this month.

“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence,” says Lynn Franco, senior director of economic indicators at The Conference Board. “As a result, consumers’ vacation intentions, which had notably improved in October, have retreated.

“On the flip side, as consumers continue to hunker down at home, intentions to purchase appliances have risen. Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021.”

Current conditions: The percentage of consumers claiming business conditions are “good” decreased from 18.8% to 16.0%, while those claiming business conditions are “bad” increased from 34.9% to 39.5%.

Consumers’ assessment of the labor market was also less favorable. The percentage of consumers saying jobs are “plentiful” declined from 26.3% to 21.8%, while those claiming jobs are “hard to get” rose from 19.4% to 22.0%.

Future expectations: The percentage of consumers expecting business conditions to improve over the next six months increased from 26.5% to 29.0%, while those expecting business conditions to worsen decreased from 22.5% to 21.9%.

Consumers also have a more favorable outlook about the job market. The proportion expecting more jobs in the months ahead increased from 25.0% to 27.5%, however those anticipating fewer jobs increased marginally from 21.6% to 22.2%.

Regarding short-term income prospects, the percentage of consumers expecting an increase rose marginally from 16.0% to 16.8%, while the proportion expecting a decrease declined marginally from 14.5% to 14.3%.

The monthly Consumer Confidence Survey is based on a probability-design random sample conducted by Nielsen. The cutoff date for the preliminary results was December 14.

© 2020 Florida Realtors® Reprinted with Permission

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