A new survey by the University of Michigan shows consumer confidence dropped in early March by 5.5% from February and is down 2.5% year-over-year. The drop is due to the spreading coronavirus and the steep declines in stock prices.
Of course, that’s not surprising news. University of Michigan economist Richard Curtin said, “Importantly, the initial response to the pandemic has not generated the type of economic panic among consumers that was present in the runup to the Great Recession. Nonetheless, the data suggest that additional declines in confidence are still likely to occur as the spread of the virus continues to accelerate.”
The U of M Survey of Consumers Index shows currently the drop in confidence is a short-term belief. “The component of the Sentiment Index that posted the greatest loss involved judgements about prospects for the economy during the year ahead; this component fell by 29 points, accounting for 83% of the total point decline in early March. In sharp contrast, consumers more favorably judged the economic outlook over the next five years than last month,” Curtin explained.
Read more about the current level of consumer confidence.