It's Going to be a Bumpy Ride. The Conference Board Insights on Pandemic Economy

Five Simple Questions and Two Revealing IndicesThe study consists of five questions posed to consumers including their assessment of current business conditions and current employment conditions quotwhich are rolled up into what we call the present situation indexquot she explained quotThen we ask them their expectations six months out regarding business conditions employment and income Those three questions are rolled up into what we call an expectations index Consumer confidence is just an average of the five questionsquot In addition to these Consumer Confidence components the study also asks questions regarding purchasing propensities which are not factored into the composition of the index Examples include intent to purchase an auto home major appliances quotWe also ask them about their inflation expectations and stock prices and vacation intentionsquot she addedBut it is the Consumer Confidence Index that is the major metric holding outsized importance in ascertaining the temperature of the economy How are consumers assessing the present situation as well as their expectations Here is where we see trouble brewingA Bumpy Economic Road AheadMarch to April the Consumer Confidence quothas declined by nearly 32 points which is the largest month to month decline we39ve seen since we have been doing the study since the 1960squot she warned quotThat is a rather significant decline obviously brought on by COVID19quot But she added quotwhen you peel away the layers of the onion and compare how consumers rate the present versus their expectations it39s a different storyquotquotConsumer attitudes on present business and employment conditions saw a 90 point declinequot plummeting from prepandemic levels as the economy ground to a halt quotExpectations however went up a little bit which was driven by an improved outlook for business conditions and employmentquot as stayathome restrictions are eased and as states reopen the economy quotIt gives consumers a glimmer of hopequot she noted But she cautioned quotWhat39s interesting is that the income expectations question was not as favorable as the other two In fact we have consumers quite pessimistic about their financial prospects in the next six months The pessimists outnumber the optimistsquot which can have implications for consumer spending as the recovery takes hold quotConsumer Confidence is now in the 80s which is a recession level readingquot she statedOverall purchase intent such as autos has declined precipitously March to April There is also quota softening in home purchasing intentions reflective of housing data we are seeing nowquot declines in major appliances purchasing as well as steep declines in vacation intentions In sum this indicates that consumers are delaying big ticketing purchasing for the time being and being cautious in their overall spendingYear to Year ComparisonsThe drops in index levels year to year are quotunprecedented in terms of month to month declinesquot she noted although quotwe have seen consumer confidence much weaker during the 2008 Great Recessionquot But this may be because the impact of the pandemic is currently at only a few weeks while the Great Recession lasted for over a yearThe Implications of Weak Consumer ConfidenceThe biggest implication of weak consumer confidence levels according to Franco quotis the unknown We haven39t seen all of the economic consequences of COVID19 played out yetquot So she cautions making any predictions about a continuing upward trend in consumer expectations quotThis could be a very bumpy ride for consumers especially if as many say there is a second wave in the fallquot In addition Franco advises that we quotkeep our eye on income expectations because that will really determine whether or not consumers are going to be willing to spend or if we are going to see as we did coming out of the Great Recession a spike in the savings ratequot where consumers became much more fiscally conservative quotThat still has to play outquotIs there a light at the end of the tunnel Franco was introspective quotIt39s going to be as the economy goes she explained and it will vary by category depending on whether there is a continuing need for social distancing such as with Hospitality quotIt runs the spectrum We need to find a new normalquot To that end quotwe need to keep an eye on consumer expectations to see if and when consumers become more willing to spend Unlike other recessions where consumers were driven by the economy and financial factors this is a health crisis with a lingering fear factoramp8230 and how we will overcome that fearquotAs far as the implications for the 2020 elections wait until September when consumer confidence levels better indicate election outcomesamp8230Click the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

Click to Make Your 2025 Contribution to Support the MediaVillage Education Foundation

It's Going to be a Bumpy Ride. The Conference Board Insights on Pandemic Economy

Author

Publish date

Channel

Charlene Weisler

American Lung Association and the Ad Council Unveil New PSAs Highlighting the Significance of Early Detection for Lung Cancer - Ad Council InSites

More Videos:

Click to Make Your 2025 Contribution to Support the MediaVillage Education Foundation

It's Going to be a Bumpy Ride. The Conference Board Insights on Pandemic Economy

Enjoying This Commentary? There's More to Love

Charlene Weisler

American Lung Association and the Ad Council Unveil New PSAs Highlighting the Significance of Early Detection for Lung Cancer - Ad Council InSites

The payment was successful

Cookies