We’ve been waiting for a little good news – any good news – on the economic front for a while now. Today we got a sliver of hope. Consumer Confidence ticked up slightly, 1.1%, in May, according to the Conference Board.
That comes after startling declines of 10.4% and 27.9% in March and April, respectively.
The increase in May was driven by future expectations. Consumers’ take on current conditions fell to its lowest level in seven years. This is likely driven by continued record job losses.
Consumers are still significantly less confident than they were in March, before the COVID-19 shock fully kicked in. We have a long way to go to repair that damage.
Consumer confidence is vital to getting the economy back on track. Consumer spending makes up roughly 70% of the economy. When consumers are confident, they spend. That spending drives growth across the economy.
Confidence will rise as the states reopen their economies and as consumers become less fearful of the virus. Recovery of confidence will take some time, but hopefully this month marks the beginning of that process. If confidence continues to rise in coming months, the worst will likely be behind us.
–Curtis Dubay, Senior Economist, U.S. Chamber of Commerce