SILVER SPRING, Md. (AP) – A closely watched gauge of US consumer confidence plummeted in December as rising coronavirus cases dragged US optimism to its lowest level since the summer.
However, growing pessimism is now spreading during the pivotal holiday season, which could make or break a number of retailers, airlines, restaurants and other industries hammered into financially during the pandemic.
The December reading of 88.6 released by the Conference Board on Tuesday is a sharp drop from last month, revised down to 92.9, and it is much worse than economists expected.
It can be an ominous sign of an economy in which consumer spending makes up 70% of all economic activity.
The Department of Commerce reported last week that US retail sales fell at a seasonally adjusted 1.1% in November, the largest drop in seven months and also worse than most expected. The thump of weak economic data can be a grim outlook for Christmas coupons, which can account for a quarter or more of a retailer’s annual sales.
The index measuring consumer assessment of current business and labor market conditions has also fallen sharply, from 105.9 last month to 90.3 in December. Consumers’ short-term outlook for income, business and labor market conditions has risen slightly from 84.3 in November to 87.5 this month, possibly due to recent approvals for COVID-19 vaccines.
It remains to be seen how Congress’s $ 900 billion emergency relief bill, passed Monday and too late for the survey, will affect consumer behavior this winter.
The bill combines funds to combat the corona virus with financial support for individuals and companies. It would institute a temporary supplemental unemployment benefit of $ 300 a week and an immediate incentive payment of $ 600 for most Americans, along with a new round of grants for hard-hit businesses, restaurants and theaters and money for schools, health care providers and tenants that are being evicted.