Consumers are feeling less confident about the economy according to a recent dunnhumby U.S. Worry Index of 29%, up from 23% as the third wave of concern began in early August. The original high mark was 30% and was measured in March as COVID-19 unfolded across the globe.
“Although worldwide our Consumer Pulse Survey is finding that on global basis worries about COVID-19 are declining, this latest update of the study shows that when it comes to the pandemic, worries are going back up in the U.S. and Mexico. This isn’t surprising since the U.S. and Mexico are both struggling to contain the virus,” said Jose Gomes, president of North America for dunnhumby. “In these uncertain times, retailers must fully understand how their customers are responding to each phase of the crisis, to meet changing needs. Retailers also need to be prepared to respond when regions experience spikes in new cases, which will likely return customers to previous behaviors from earlier phases in the pandemic.”
A key finding in the survey was U.S. consumers’ concern about the economy and rising food prices. The survey also found 67% of Americans surveyed think the economy is” poor” and 75% think the government is doing a “poor job” dealing with the virus. Also, 41% reported their personal finances are “poor”, with 48% spending more money on food and 42% have noticed rising food prices since the start of the pandemic.
“Unfortunately with the surges of new cases in many regions of the world, we will not put this crisis behind us until a vaccine is widely available to the public,” said Gomes. “But, by understanding what matters most to customers by bringing together customer data and insights, retailers can help their organizations navigate and plan for the uncertainty ahead and respond to the evolving needs and worries of their customers.”
Also this week the Conference Board reported U.S. consumer confidence fell to its lowest level in more than six years, noting the resurgence of COVID-19 infections in many parts of the country weighing down optimism with a reading of 84.8 in August. That followed a July reading of 91.7, which was also down from June. The Conference Board said the August drop put the index 36% below its high reading in 2020 in February before the COVID-19 pandemic gripped the country.
“Consumer spending has rebounded in recent months but increasing concerns among consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead,” said Lynn Franco, senior director of indicators at the Conference Board.
The part of the index that measures present conditions decreased sharply with consumers indicating that business and employment conditions have deteriorated sharply over the past month. Consumer optimism about the short-term outlook and their financial prospects also declined.
Economists with Wells Fargo Securities expect consumers to be more resilient in their spending than most surveys predict given than income has held up remarkably well given the plunge in nonfarm payrolls. The economists add this is because of well-targeted stimulus efforts, noting that failure to reach a deal on more stimulus would have a wide-ranging impact on the economy, putting recent economic gains at risk.
Mervin Jebaraj, director of the Center for Business & Economic Research at the University of Arkansas, said the absence of stimulus was a blow to consumer confidence in August. He said people don’t realize the impact of the recent stimulus that replaced all of a furloughed worker’s income and then some in many cases. He said it allowed them to pay rent and buy food, which helped the U.S. avoid larger problems and boosted consumer sentiment in July.
As long as there is a gap in stimulus for the unemployed and businesses impacted by COVID the economy will continue to falter. He said more stimulus is needed and without it the recession will worsen and consumer sentiment will also slide. Jebaraj said it’s the lack of stimulus and not COVID-19 health fears that have derailed consumer sentiment in August.