Written by Steven Hansen
The latest Conference Board Consumer Confidence Index’s headline number again significantly declined, following March’s record decline. The Index now stands at 86.9 (1985=100), down from 118.8 in March. A quote from the Conference Board: “The 90-point drop in the Present Situation Index, the largest on record, reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis“
Analyst Opinion of Conference Board Consumer Confidence
Consumer confidence had been on a multi-year upswing, the upswing paused in 2019 – but the coronavirus killed the upswing.
The consensus range from Econoday was 75.0 to 106.0 (consensus 95.0). This month’s index is based on data collected through March 19, 2020.
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Per Lynn Franco, Director of Economic Indicators at The Conference Board:
Consumer confidence weakened significantly in April, driven by a severe deterioration in current conditions. The 90-point drop in the Present Situation Index, the largest on record, reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis. Consumers’ short-term expectations for the economy and labor market improved, likely prompted by the possibility that stay-at-home restrictions will loosen soon, along with a re-opening of the economy. However, consumers were less optimistic about their financial prospects and this could have repercussions for spending as the recovery takes hold. The uncertainty of the economic effects of COVID-19 will likely cause expectations to fluctuate in the months ahead.
Caveats Relating to CB Consumer Confidence
From the Conference Board:
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch.
Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers watch and buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services for all devices on which content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen also provides its clients with analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries, covering more than 90 percent of the world’s population. For more information, visit www.nielsen.com.
From Econoday:
The Conference Board compiles a survey of consumer attitudes on the economy. The headline Consumer Confidence Index is based on consumers’ perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income. Three thousand households across the country are surveyed each month. In general, while the level of consumer confidence is associated with consumer spending, the two do not move in tandem each and every month.
Consumer confidence and retail sales generally move in tandem but not necessarily each and every month. Note that consumer assessments of employment conditions are heavily weighted in the consumer confidence index.
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