The Economy: Consumer Confidence Declines (Further)

By at 22 December, 2020, 3:15 pm

by Raymond J. Keating-

In the midst of an economy struggling under a pandemic stretching beyond its ninth month, no one should be surprised that the latest measure of consumer confidence from the Conference Board showed a decline in December.

The December drop followed a decline in November as well. Indeed, the decline in the last two months has been noteworthy. After big declines in February and March, the Consumer Confidence Index began to recover – albeit unevenly – from June to October. The October level registered 101.4, then dropping to 92.9 in November and 88.6 in December. The December level is only a bit higher than the recent lows registered in April and May of this year.

Lynn Franco, the Senior Director of Economic Indicators at The Conference Board, made the following assessment based on this latest data:

“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence. 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.”

It is hard to argue with this outlook.

This snapshot of consumer confidence also lines up with the most recent report on retail sales. As noted in our look at those numbers, I pointed out that “since business, in particular, small business, has been suffering in this pandemic economy, the consumer is not exactly going to be spending freely. With vaccines and therapeutics arriving to deal with the coronavirus, there is increased hope – a light can be seen at the end of the tunnel. However, there remains rough terrain to cover before we get there.”

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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