Consumer Confidence: Sharp Rebound
June 30, 2020
Bottom Line: Consumers' assessments of the economy rebounded even more than expected in June as consumers' worst fears about the economy dissipated amid reopenings. Their assessments of the "present situation" and their "expectations" jumped. However, a closer read of the results reveals that most of the improvement was due to less pessimism rather than increased optimism. For instance, the percentage of consumers claiming business conditions are â€œgoodâ€ rose from 16.4 percent to 17.4 percent, while those claiming business conditions are â€œbadâ€ decreased from 51.2 percent to 43.2 percent. Overall, the consumer remains fragile with large swaths of the pre-Covid labor force now relying on government payments. For now, though, that remains enough to aid a sharp rebound in consumption from the lows, if still well below the levels before the shutdowns. Consumer Confidence ROSE by 12.2 points in June to 98.1, compared with market expectations for an increase to 91.5. The index is now 21.1% BELOW its year-ago level. Present Situation Index ROSE by 17.8 points to 86.2. The index is 47.5% BELOW its year-ago level. The Expectations Index ROSE by 8.4 points to 106.0. The index is 8.6% ABOVE its year-ago level. The labor differential, the percentage of respondents who said jobs are â€œhard to getâ€ from the percentage who said jobs are â€œplentifulâ€ , moved higher by 9.7 points to -3.0.
Article by Contingent Macro Advisors