Virus Fears Causes Massive Drop In US Consumer Confidence

Fear of the coronavirus pandemic sent US consumer confidence falling by a massive amount in April, a survey said Tuesday, but consumers remained somewhat optimistic about the future.

The results of The Conference Board's latest Consumer Confidence Index were slightly better than expected but nonetheless indicative of the damage done by the pandemic in the United States, which is home to the world's largest coronavirus outbreak.

The index dropped to 86.9 in April from the downwardly revised 118.8 in March, when consumers were already nervous over the virus.

The previous month's survey was taken only halfway through March, and April's is the first to capture the full effects of the pandemic that has shuttered businesses, led to tens of millions of layoffs and forced people to stay inside to stop the virus's spread.

The survey's Present Situation Index, which measures consumers' assessments of the current economic and labor conditions, posted its largest-ever drop from 166.7 in March to 76.4 in April.

The survey found 45.2 percent of participants felt business conditions were "bad," up from 11.7 percent in March, with only 20.8 percent saying conditions were "good."

"The 90-point drop in the Present Situation Index, the largest on record, reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis," said Lynn Franco, senior director of economic indicators at The Conference Board.

However, consumers expressed some optimism that the situation would be getting better, with 40 percent expecting improvement in the next six months, perhaps as the lockdowns are lifted, though about a quarter saw things worsening. Both numbers were increases from March.

"The story here seems to be that... people think the current position is so bad that business conditions and the labor market have to (get) better -- though not necessarily good -- in six months time," Ian Shepherdson of Pantheon Macroeconomics said in an analysis.

But the optimism was guarded. The survey found the number of people expecting more jobs to be available in the future rising sharply, but those expecting fewer jobs also crept up.

And consumers expecting an increase in their short-term income declined slightly to 16.7 percent, while those expecting their incomes to fall rose from 10.1 percent to 18.5 percent.