The continued nationwide economic reopening helped push a key measure of consumer sentiment higher in June. The University of Michigan’s Index of Consumer Sentiment rose 6.6 points (9.1%) in June from May, and the read on both current economic conditions and the forward-looking index of consumer expectations solidly improved on the month. The boost in overall optimism is due in large part to slowly-growing confidence in the labor market. More survey respondents expected the jobless rate (which remains near its highest level since World War II) to decline than at any point since the survey began in 2008. Even so, the report’s underlying data suggest all is not well in the minds of consumers, and that few people expect favorable economic conditions to return any time soon. Almost half of the survey’s respondents expect a renewed downturn in the economy in the coming years, while about two-thirds said they remain uncertain about their income prospects in the next 12 months, mostly due to a perceived slow recovery in the labor market. According to the report, this uncertainty is hindering people’s willingness to make discretionary purchases – including houses.
Despite persistent uncertainty – as evidenced by yesterday’s massive stock selloff – indications are emerging that suggest the economic recovery is gaining steam. Goldman Sachs found that consumer spending is currently at about 90% of the level it was on March 1, just prior to the full onset of the pandemic in the U.S., up from 74% at its worst point. Foot traffic to restaurants and hotels has improved significantly in recent weeks. Other, less aggregated indicators of consumer activity are also rising. TSA passenger traffic rose above 500,000 people yesterday for the first time since the outbreak began, and is up 28% week-over-week – a marked gain even as passenger air travel remains 81% below last year’s levels. And subway ridership in New York City rose 25% for the week, as many city businesses started reopening and people began going back to work. The recovery has a long, long way to go, but it’s clear that people are slowly reverting towards some normal levels of activity.
But ongoing reopening and recovery efforts have also renewed some concerns about a fresh wave of coronavirus cases. While new cases have declined sharply in New York, the hardest hit region in the initial onset of the crisis, other regions – including some of the nation’s most populous states – are witnessing a surge in new cases. Just this week, Texas and Florida both reported their highest one-day count of new coronavirus cases yet, while California nearly matched its one-day record set just last week. And while the federal government has stated its aversion to shutting down the economy once again in response to this growth, other parts of the country seem to be taking matters into their own hands. Texas’s case counts in the early days of the coronavirus outbreak were relatively modest compared to other states, prompting an aggressive reopening plan, but recently case volumes have begun to rise. Officials in the Houston area said they are very close to reimposing shelter-in-place orders as cases continue to mount.
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