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Category: Consumer Spending

  • Gallup: 60% of U.S. Adults Say Economy is ‘Getting Worse’

    By Michael W. Chapman 

    In its latest survey on economic confidence, Gallup found that 60% of adults believe the U.S. economy is “getting worse” while only 37% think it is “getting better.”

    In addition, Gallup’s Economic Confidence Index fell from -6 in July to -12 in August.  Prior to the start of the COVID pandemic, approximately February-March 2020,  the Economic Confidence Index was at a positive 41, and had been in the positive range going back to early 2019.

    (Gallup)

    The Index hit a low point in April 2020 of negative 33, apparently because of the effects of the COVID pandemic. 

    “The decline in confidence appears likely tied to the recent increase in coronavirus infections,” reported Gallup.  “The August survey found the percentage of Americans naming COVID-19 as the most important problem facing the country doubling, and it is once again the top overall problem mentioned.”

    “The pandemic has brought a number of shocks to the U.S. economy,” said the survey firm.  “The recovery from widespread business shutdowns in the spring of 2020 has been solid at times and uneven at others. Currently, the economic growth as measured by gross domestic product is healthy, the unemployment rate is decreasing and stock values are at record levels.”

    “At the same time, the U.S. is still well short of the number of jobs it had before the pandemic, and employers are struggling to fill the openings they do have,” said Gallup.  

    Another major factor potentially affecting economic confidence, but not mentioned as meaningful by respondents in Gallup’s survey, is inflation.  

    On July 11, the Wall Street Journal reported that, “Americans should brace themselves for several years of higher inflation than they’ve seen in decades, according to economists who expect the robust post-pandemic economic recovery to fuel brisk price increases for a while.”

    “Higher inflation for several years would ripple through the economy in various ways,” said The Journal. “Consumers could find their household budgets squeezed. Higher borrowing costs could weigh on stock values and could crimp growth in interest-rate-sensitive industries like housing. Higher inflation can also make it harder for businesses to plan longer-term investments.”

    Kevin Swift, chief economist at the American Chemistry Council, told The Journal, “It’s disruptive — you can’t be sure of what your costs are, whether you can get supplies or what the costs will be six months from now.”

    “I’d hate to be in the construction business trying to bid on a job when you don’t know what the cost of steel will be 18 months from now,” said Swift.  

    For the Aug. 2-17 survey, Gallup interviewed 1,006 adults, ages 18+, living in all 50 states and the District of Columbia.  The margin of sampling error was +/- 4 percentage points. 

    The post Gallup: 60% of U.S. Adults Say Economy is ‘Getting Worse’ appeared first on Basic Income Today.

    This post was originally published on Basic Income Today.

  • Fourth stimulus check: can the decrease in consumer spending impact its approval?

    New data on consumer spending in the retail sector dipped in May after peaking in March with the passage of the third round of stimulus checks. Will another check be sent?

    By: Maite Knorr-Evans

    According to data from the Department of Commerce, consumer spending in retail increased almost ten percent in March after the third round of stimulus checks were sent. However, spending levels declined in April, increasing .09%, and continued their downward trend even further in May to -1.3%

    The data from federal agencies shows that after the third direct payment was distributed, people spent more. These increases were thought to be a cause of virtuous cycles wherein businesses taking in more revenue, would be more likely to staff up. With increases in the workforce, more money begins to circulate throughout the economy as workers begin spending their paychecks. But, this is only partly shown in the data, with unemployment continuing to decline, but spending also facing a downward trajectory. 

    Could declines in retail spending mean another stimulus check is on the horizon?

    Some policymakers looking at consumer spending data and the beneficial impacts direct payments have had on families in the US, support passing an additional stimulus check. However, momentum seems to be waning on Capitol Hill as the legislatures try and work out a deal over infrastructure, and other priorities, before heading home for summer recess.

    While the May numbers did not surpass the levels seen in April, some economists are not concerned as they are still above pre-pandemic spending levels. What would begin to concern lawmakers and experts is if the decline continues to levels seen in the early stages of the pandemic or even before. For context, in February 2020, consumer retail spending totaled 525 billion dollars. Last month that figure was 620 billion.

    The New York Times reported on their discussions with experts who believe the data shows that “consumers have most likely spent all they need to furnish their homes or upgrade their phones during the homebound months of the pandemic.” Rather than spending in the retail market, they are shifting to others, including travel and dining.

    An entire picture of spending in the economy will be available later this month when the Bureau of Economic Analysis releases data on consumer spending across markets and sectors. Throughout 2021, retail spending and the broader indicator have moved in unison, meaning that households may be holding onto their money or do not have the disposable income needed to spend at the levels they did in March.

    If spending levels continue to drop, it may be a sign to lawmakers that more direct payments are needed. June, July, and August spending data will be critical to understanding the current trends for two main reasons.

    The first factor is the impact vaccination will have on spending as summer in the US begins. With more Americans reporting that they feel comfortable traveling, dining, going to the movies, concerts, and sporting events, there is sure to be an impact on household spending.

    However, the second factor could lead to a decrease in spending. A student released by the National Bureau of Economic Research found that almost seventy percent of unemployment claimants have seen incomes that surpass the levels from when they were working. As dozens of states cut federal pandemic-related unemployment benefits and workers reenter the labor market to jobs that pay them less than what they were making on unemployment, spending could decrease.

    In September, when federal unemployment benefits end across the US, lawmakers will have a multitude of indicators and data to evaluate whether the economy would benefit from another round of stimulus checks.

    The post Fourth stimulus check: can the decrease in consumer spending impact its approval? appeared first on Basic Income Today.

    This post was originally published on Basic Income Today.