The overall consumer sentiment across the United States of America has improved during late September. It serves to be a pickup in the overall optimism related to economic rebound. However, the gauge is still known to remain below the levels of the pre-pandemic era.
The final sentiment index as per the University of Michigan has increased to around 80.4. It has appeared to be firmer in comparison to the previous reading of 78.9 and then, 74.1 during August. As per a recent study report by Bloomberg, the experts analyzed that the median estimate indicates a slight increase to 79.
The given measures of expectations have jumped significantly by around 7.1 points to reach 75.6 from the previous months. On the other hand, the gauge of current conditions has increased by 4.9 points to reach around 87.8 from the period of August.
Consumer Sentiment or Confidence Increases in the United States of America
The overall increase in consumer sentiments is reflected more in the United States of America. The nation and its consumers continue embracing the outlook of positive economic conditions along with the potential for rapid growth. The gauge is still known to remain below the levels of pre-pandemic conditions. This is known to pinpoint to specific concerns about the given path of recovery.
The experts from the survey reveal that while consumers out there have forecasted gains in the overall national economy since the time of the shutdown during April, the survey conducted in September revealed a major increase in the given proportion. This estimation helps in setting up expectations with respect to the re-establishment of lucrative times in the economy on financial grounds. However, the overall optimism has been significantly driven by immense optimism amongst upper-income households.
A separate study report indicated that the overall rate of employment gains has cooled during September. Another study release revealed that the recovery of slow labor market continues. There has been a slight decrease in the number of initial jobless claims during the period.
Even until now, additional fiscal stimulus remains elusive. Therefore, it is not clear whether or not additional support will be getting materialized before the time of presidential election. The overall outlook of the Americans towards the respective economy is likely to play a major role in deciding who would be coming top in the voting process. Sentiment amongst both political independents and democrats has increased significantly in the month of September in comparison to that of the Republicans. However, the overall optimism for the latter form of voting still continues remaining higher.
Consumer Confidence Survey
The consumer confidence survey that is carried out on a monthly basis is based on random sample on probability design. The given survey is conducted by Nielsen for the Conference Board. Nielsen is a leading global-level provider of in-depth information as well as analytics around what consumers prefer buying & watching. The cutoff date for the issuance of the preliminary results had been 18th September.
Lynn Franco –the Senior Director at the Conference Board for Economic Indicators, revealed that consumer confidence in the United States of America has increased considerably in September. This has happened after several declines happening month-after-month. However, it still continues remaining below the level of the pre-pandemic period.
While Americans are not known to be avid savers in the world, the given survey revealed that they are faced with the dramatic economic uncertainty of the given outbreak. As such, the consumers out there have rapidly learned to become better savers. The overall personal saving rate in the United States of America has recently reached the historic value of 33 percent of the respective disposable income during April.
Factors Contributing to Consumer Confidence
Consumer confidence can be defined as the outlook that consumers out there tend to have with respect to the economy as well as the individual financial condition. The given outlook can be either optimistic (highlighting higher consumer confidence) or pessimistic (highlighting lower consumer confidence).
The overall level of consumer confidence in a given economy is useful in indicating the overall willingness of the consumers to save, borrow, and spend. A higher value for consumer confidence is known to encourage a higher value for marginal propensity for consuming. On the other hand, when a fall is indicated in the given value of consumer confidence, it is known to indicate a condition of economic downturn.
Factors Affecting Consumer Confidence
- Economic News: Saddening statistics about national and global economy will ultimate reduce the overall confidence while encouraging saving instead of spending.
- House prices: Housing turns out to be one of the largest forms of household wealth. As such, falling house prices are going to indicate reduced wealth & consumer confidence. On the other hand, rising house prices are going to allow households to re-mortgage while gaining equity withdrawal.
- Uncertainty: A major economic or political change could lead to uncertainty. This ultimately reduces the overall confidence. For instance, cases like a major terrorist attack or uncertainty over the existing Brexit deal.
- Unemployment: The overall fear or risk of rising unemployment is going to discourage the consumers.
- Personal Debt Levels: An increase in the overall debt levels is going to be a major source of concern –particularly when interest rates will be rising or the economy continues slowing down.
- Inflation & Real Wages: Higher inflation rates are going to reduce consumer confidence significantly. Failing and stagnant wages are going to make consumers pessimistic.
- Economic Growth: A period of recession is going to invariably deliver a fall in the overall consumer confidence. On the other hand, positive economic growth is going to improve the overall consumer confidence.
- Current Economic Situations: The consumers’ expectations are known to be primarily based on the ongoing economic conditions. Falling house prices and news about job losses are some of the major factors that influence consumer confidence.
With an increase in consumer confidence in the given pandemic, it can be indicative of a positive future for the retail industry.