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26 Feb 2021 06:06:19 UTC
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Consumer Confidence Resumes Slide After V-shaped Hopes Dashed, Unemployment Beginning To Rise Again
The collapse in consumer confidence was definitely a big upset. Expectations were for a continued rise howbeit a modest one but the V-shaped hopes from the last survey turned out to be unfounded. The drop in consumer sentiment was across all segments but was more pronounced among higher wage earners. The last U Mich consumer sentiment survey was celebrated as being the beginning of a V-shaped recovery and many consumers didn't expect the economy to deteriorate further and it's caused some of those V-shaped hopes to fade. Buying conditions also fell for autos and large durables like appliances. Buying conditions for homes was supported in the beginning of the month by the record low mortgage rates but that too has begun to turn lower as the economic uncertainty and mass job losses are beginning to put pressure on an increasing number of households. I think the main issue here is a lot of consumers were led to believe the situation in the US was much better than it is in reality and it has really caught them off guard. With a turn in sentiment and expectations for a continued decline from the University of Michigan, we could see it begin to reverberate through the rest of the economy and see a lot more data sets begin to reflect the collapse from here. Another alarming trend is the fact that unemployment is on the rise again after declining for several weeks and we are back above double the previous record outside of this economic collapse. With continuing unemployment claims ranging in the millions every week, it will be hard to stage any kind of recovery besides one made of pure belief. As we can see in the consumer confidence data the facade is beginning to fail and the economic realities of the 2020 recession are pressing in on American households.
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https://www.youtube.com/watch?v=3NL-xS2v7sM
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