MORNING CONSULT ECONOMIC INTELLIGENCE

Momentum in the Recovery in Consumer Confidence Slowed in Mid-September

Updated: September 16, 2020
This chart displays the ICS, a measurement of consumer sentiment. Higher numbers indicate greater confidence.

 

Welcome to Morning Consult’s U.S. consumer confidence dashboard, powered by Economic Intelligence. Every week, this page will update with the latest national data and insights from our economic team. Additionally, state-level data and findings will be updated once a month.

Morning Consult surveys around 6,000 U.S. consumers every day on their views regarding current and future personal financial conditions and business conditions in the country as a whole. The results from those survey interviews are inputted into the Morning Consult Index of Consumer Sentiment (ICS), which rises as consumer confidence increases. In addition to the ICS, our overall measurement for consumer confidence, Morning Consult uses the responses to track consumer sentiment regarding just the current economic conditions (the ICC) and just expectations for future conditions (the ICE).

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This week's results are based on around 40,000 survey interviews conducted September 9-15, 2020

WEEK AT A GLANCE

Consumer confidence rose slightly this week, but the gain represents the lowest weekly uptick since early August. While there are no signs yet of an outright contraction in confidence, a slowdown in the rate of increase in and of itself threatens to derail whatever momentum the economy has. 

Morning Consult economist John Leer pulled out three key insights from the data this week:

KEY TAKEAWAYS

Momentum in the recovery in consumer confidence slowed in mid-September. Morning Consult’s daily U.S. Index of Consumer Sentiment (ICS) equaled 90.96 as of Tuesday, up 0.18 points from the prior week. For context, weekly increases in the ICS have not fallen below 0.2 points since Aug. 8. 

The speed of the recovery in confidence plateaued. The 30-day percentage change in the ICS peaked at 5.2% on Sept. 10. Since then, growth has steadily fallen, indicating that the speed of the recovery in confidence is slowing. Changes in consumer confidence tend to be closely correlated with changes in consumer spending. Thus, a plateau in consumer confidence is particularly worrisome for consumer sectors heading into the holiday season. View the trend over time

A sustained slowdown in confidence jeopardizes the broader economic recovery.  While there are no signs yet of an outright contraction in confidence, a slowdown in the rate of increase in and of itself threatens to derail whatever momentum the economy has. As gains in confidence slow, consumers tend to tighten their wallets, directly affecting consumer spending, which in turn makes it harder for businesses to justify adding to or even maintaining their current workforces. Thus, a slowdown in confidence further weakens the demand for labor and acts as a headwind to additional decreases in unemployment. The expiration of federal unemployment benefits increases the severity of this vicious cycle since unemployed workers have less money to spend now than they had over the summer. Consequently, the economy is more vulnerable now to a slowdown in confidence than it was in July, when the increase in cases drove down confidence.

 

 

NATIONAL TRENDS

This week, consumers’ expectations for the future held steady, as did evaluations of current conditions.

Daily U.S. Consumer Confidence Indices

Reading this data: In order to gauge consumer sentiment, Morning Consult asks five questions relating to personal finances and business conditions in the country as a whole. The results from those five questions are then inputted into these three indices: The ICS is the overall measurement based on the results of all five questions; the ICC reflects consumers’ views of their current personal financial conditions and of current buying conditions for large household goods, and the ICE measures consumers’ expectations of their future personal financial conditions and business conditions in the country as a whole.

 

 

STATE-LEVEL TRACKING

Since the onset of the coronavirus pandemic, consumer confidence has shifted dramatically in all 50 states. However, the precise magnitude and nature of those shifts vary in important ways. This map tracks state-by-state consumer sentiment since the beginning of the year, and it will be updated once a month to reflect the latest data.

Monthly Consumer Confidence Tracking By State
Updated: September 2, 2020

Jan

STATE LEVEL TAKEAWAYS

Consumers across most of the country grew more optimistic in August than they were in July, with 40 of the 50 states registering a monthly increase in consumer confidence. The average increase across the country was 2% in August.

The reactions of consumers across the country to news and policy developments grew more unified in August than they have been since May. The standard deviation of the 30-day percent change in the ICS across all 50 states was 2.6% as of the end of August, significantly down from 3.4% and 3.1% as of the end of June and July, respectively. The decrease in the standard deviation indicates that recent improvements in economic conditions were relatively similarly experienced and interpreted across the country. By contrast, consumers reacted very differently in June and July as geographic differences in the spread of the virus drove divergent economic outlooks.  

Wisconsin was one of the 10 states to experience a decrease in consumer confidence in August, with the ICS falling 1.18% during the month. As the rest of the country coalesced around a more optimistic national economic narrative, consumers in Wisconsin broke that trend. If Wisconsin voters feel the same way as consumers, that divergence may prove meaningful in November. The other nine states to register a decrease in confidence were Wyoming, North Dakota, Hawaii, New Hampshire, Maine, Virginia, Illinois, Montana and Idaho.

"THIS IS THE FUTURE"

Moody’s Analytics Chief Economist Mark Zandi, on Morning Consult Economic Intelligence’s Global Consumer Confidence tracking

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