As coronavirus infections spread across the country, consumer confidence fell considerably in August, marking the greatest dip since the economy shut down in April 2020.
According to the University of Michigan’s Sentiment Index, consumer confidence fell 13.5 percent from July to August, falling 11 points to 70.2. Year-over-year sentiment fell 5.3 percent, with declines recorded across all income, age, and educational divisions in all areas of the United States.
The August low is a significant drop in consumer confidence, coming in just below the April 2020 low of 71.8, when the United States shut down non-essential companies to help prevent the spread of the coronavirus.
The Sentiment Index has only registered higher losses than what was experienced in six other monthly surveys in August over the last half-century, according to the institution. All were caused by abrupt unfavorable events in the economy, such as the government shutdown in April 2020, which reduced consumer confidence by 19.4 percent, and the Great Recession in 2008, which reduced consumer confidence by 18.1 percent.
Consumers, on the other hand, pointed to predicted losses across the economy, from personal finances to inflation and unemployment, in this research.
According to Richard Curtin, Chief Economist at the University of Michigan Surveys of Consumers, the pandemic’s comeback caused by the Delta variant is undoubtedly being “received with a blend of reason and passion.”
“Consumers have properly reasoned that the economy’s performance will be weakened over the next several months, but the unprecedented spike in negative economic assessments also reflects an emotional response, primarily from failed hopes that the pandemic would soon end,” he stated.
“In the coming months, it is likely that consumers will voice more reasonable expectations, and with control of the Delta version, they will transition toward outright optimism. The consumer reaction to Delta’s somewhat increased cautious measures demonstrates the difficulty in creating appropriate policy responses,” Curtin remarked.