The numbers will have much to do with the way the pandemic has changed our way of life.
We will be seeing the consumer confidence data coming out tomorrow and expectations are for a steeper fall.
Consumer confidence tracks sentiment among households or consumers. It represents the confidence consumers have in the economy and therefore assists in foreseeing consumer spending.
The higher the spending, the higher the confidence in the economy.
The forecast for March is 115.1 from a previous 130.7.
Latest Survey Reveals Gloomy Scenario
The latest survey conducted by Ipsos on March 24-25 states that the sentiment fell sharply in March. The majority of those surveyed said they are less comfortable making a major purchase like a home or a car (67%) and other household purchases (66%).
In fact, US consumer sentiment plummeted the most in March than it has since the market crash back in 2008. The surge in COVID-19 cases across the nation is alarming, with the lockdown of major businesses halting the economy.
In the 18 years since Ipsos started tracking US consumer confidence, this week’s slump has been the steepest to date. The index dropped to 46.0 from 60.9 previously.
The University of Michigan’s final sentiment index for March plunged 11.9 points to a three-year low of 89.1, data on Friday showed.
The economy has fallen into a pit with fear riding high amongst investors and consumers. The majority expect that the worst is yet to come.
Will Stimulus Put Confidence Back into the Economy?
The Fed is “committed to using its full range of tools to support households, businesses and the US economy overall.”
The bank is currently employing tactics used during the 2008 market crunch, along with new ones to soothe the market’s fears. However, the real question is whether the stimulus will able to halt the crumbling effect of the pandemic on the economy.
The answer is already available in the shape of the latest surveys mentioned above. Most small businesses will be hurt and will be forced to close. There will be a wave of unemployment and quite honestly, a recession may have already begun.
The Fed’s efforts have been tremendous, but the situation at hand is grim. All they can do is limit the damage and allow for recovery when the conditions are favorable.
The bank has been trying to bring calm into the financial markets. It wants to resurrect both bond markets and indices. A healthy turnaround in stocks and the bond market would certainly point to stability. This would lead to investor confidence, so the sooner this happens, the better.
Time is of the Essence
The lack of confidence will continue until the pandemic is under control or has been totally eradicated.
The longer the pandemic stays, and the longer it takes to find a vaccine, the worse it will get. No matter what the Fed does.
Don’t be surprised if the actual numbers come in much lower than forecast, as the situation is worsening every day.