Consumer sentiment rose for the second consecutive month in June but slipped a bit in the later half of the month, the University of Michigan’s survey showed Friday.
The survey’s index of consumer sentiment rose to 78.1, up from 72.3 in May and 71.8 in April. Back in February, before the pandemic, the index was above 100. One year ago, it stood at 98.2
The final read of consumer sentiment was below the 78.9 mid-month score, another sign that the pace of the recovery may have slackened this month. Jobless claims on Thursday showed that layoffs remained near the 1.5 million mark for the third consecutive week, suggesting that the labor market’s rebound may have stalled.
“While most consumers believe that economic conditions could hardly worsen from the recent shutdown of the national economy, prospective growth in the economy is more closely tied to progress against the coronavirus. The early reopening of the economy has undoubtedly restored jobs and incomes, but it has come at the probable cost of an uptick in the spread of the virus,” Richard Curtin, the survey’s chief economist, said.
Both the current conditions and expectation components of the index improved from a month ago. But both remain around 20 percent below the year ago levels.
Curtin pointed out that consumer sentiment if very closely tied to fears of the infection and varies regionally. The Sentiment Index rose by just 0.5 Index-points among Southern residents in June, and by only 3.3 Index-points among Western residents. In the Northeast, however, sentiment rose by a record 19.1 points. Curtin said this is likely due to Northeasterners “expecting the later and more gradual reopening to produce at worst a negligible increase in infections.”
“The resurgence of the virus will be accompanied by weaker consumer demand among residents of the Southern and Western regions and may even temper the reactions of consumers in the Northeast. As a result, the need for additional fiscal policies to relieve financial hardships has risen,” Curtin said. “The need for new relief programs is urgent and would best be accomplished before the national elections dominate the debate.”
The survey may also indicate a political headwind for President Donald Trump. According to Curtin, confidence in government economic policies has fallen in the June survey to its lowest level since Trump entered office