“Consumer spending makes up 70 percent of GDP,” said Torsten Slok, chief economist at Deutsche Bank Securities. “An important part of your and my consumer spending is your wealth and whether you have a job.”
The decline has not been as bad as some economists expected – consumers were surveyed between March 1 and March 18 – but with more than 3 million people entering unemployment in just one week this month, it will Number will certainly continue to decrease.
The survey period “is almost exclusively before the start of decommissioning / mass layoffs,” said Megan Greene, an economist at Harvard Kennedy School. “I would also expect the next consumer confidence numbers to get much worse.”
Consumer confidence was consistently one of the bright spots in the US economy under Trump before the pandemic. Even as corporate investment shrank and manufacturing went into recession, healthy spending by Americans helped lower unemployment to lows never seen since the 1960s.
This trust could be difficult to restore, depending on the effectiveness of the relief efforts being pursued by Congress and the administration, economists say.