latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/us-consumers-end-2020-with-economic-sentiment-well-below-pre-pandemic-levels-61875573 content esgSubNav
In This List

US consumers end 2020 with economic sentiment well below pre-pandemic levels


Japan M&A By the Numbers: Q4 2023


Banking Essentials Newsletter: 7th February Edition


Insurance Underwriting Transformed How Insurers Can Harness Probability of Default Models for Smarter Credit Decisions

Case Study

A Bank Outsources Data Gathering to Meet Basel III Regulations

US consumers end 2020 with economic sentiment well below pre-pandemic levels

U.S. consumer sentiment improved month over month in December but ended 2020 still far below the levels seen before the coronavirus pandemic gripped the economy, the latest survey data from the University of Michigan showed.

The index of consumer sentiment registered a final December reading of 80.7, up from 76.9 in November. The index was at 101.0 in February, weeks before the pandemic triggered lockdowns and sharp declines in economic activity.

The current economic conditions index increased to 90.0 from 87.0, while the index of consumer expectations rose to 74.6 from 70.5.

"Nearly everyone has reported negative assessments of current conditions in the national economy," wrote Richard Curtin, Surveys of Consumers chief economist.

Curtin added that the pandemic has created a large divide across households in how they assess their personal finances, with those without jobs and incomes maintaining "quite negative" views.

"While the rollout of the vaccine has been greeted as the beginning of the end, the end of the pandemic is still on the distant horizon in terms of a return to normalcy for consumer behavior, even among the most favored households," Curtin said.

A separate index of consumer confidence published by the Conference Board fell to a four-month low in December, defying expectations for an increase, as the continued rise in COVID-19 cases and reimposition of restrictions on activity weighed heavily on households' assessments of economic conditions.

Earlier Dec. 22, the Bureau of Economic Analysis reported that consumer spending dropped 0.4% month over month in November, the first drop since April. Declines in personal income and disposable personal income accelerated during the month, while the personal saving rate also fell.

"A rapidly worsening health situation, weakening income, depleted savings for lower income families and cooler weather led consumers to slam their wallets shut in November," wrote Gregory Daco, head of U.S. macroeconomics at Oxford Economics.

The U.S. Congress on Dec. 21 passed a $900 billion coronavirus relief package to support the economic recovery that is seen fading in the final quarter of 2020. President Donald Trump has threatened to upend the stimulus package, asking Congress to increase stimulus payments for individuals to $2,000 from $600.

Further delays in the passage of the stimulus package pose a "considerable risk" to the economy, according to Daco of Oxford Economics. "COVID relief package cannot be understated. Without it, consumer spending growth could flirt with zero in Q1," he said in a note.