Consumer sentiment grew dimmer in late July as coronavirus infections surged, governments reversed or delayed reopening plans, and layoffs rose.
The University of Michigan’s final July reading of its sentiment index sank to 72.5, down from the preliminary July reading of 73.2 and June’s final reading of 78.1, according to data released Friday.
Economists surveyed by Econoday had expected the final reading to hold steady with the midmonth report.
“In the last four months, the Sentiment Index has remained trendless, averaging 73.7, a decline of 25 percent from the same period in 2019,” the survey’s chief economist, Richard Curtin, said.
The survey’s current conditions component declined 82.8, down from the preliminary reading of 84.2 and June’s 87.1. The expectations component dropped to 65.9 from last month’s 72.3, matching the six-year low from May.
“While the 3rd quarter GDP is likely to improve over the record-setting 2nd quarter plunge, it is unlikely that consumers will conclude that the recession is anywhere near over,” Curtin said.
The federal government’s relief programs have “prevented more substantial declines in consumer finances, partially shielding consumers from the unprecedented surge in job losses, reduced work hours, and salary cuts,” according to Curtin.
“The lapse of the special jobless benefits will directly hurt the most vulnerable and spread even further by missed rent, mortgage, and other debt payments,” Curtin said. “Easing off the added jobless benefit will naturally result with job growth as well as provide for a delayed and gradual reduction in added benefits so that its eventual absence is much less disruptive.”
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