Consumer Data Sends Chilling Warning About Stock Market Fragility

  • Consumer sentiment data shows people are still worried about the future of the U.S. economy.
  • For the government’s spending to be worthwhile, consumer spending needs to return.
  • The stock market will be turning to the return of consumer spending as states start to reopen.

As the stock market pines for U.S. states to reopen their economies, the University of Michigan’s consumer sentiment survey shows consumers may not be quite ready to return to life as normal. Instead, they’re becoming more concerned about the state of the economy with every passing week.

Between March and April, consumer sentiment fell by 19.4% overall.

Consumer sentiment data showed people are more concerned about the present than they are about the future. | Source: University of Michigan

There was some good news, though. The data showed that although consumers are worried about the future, it’s the present that’s causing the most concern. The index of consumer expectations, which measures consumers’ view of the future, declined 12%. The index of current economic conditions fell 28.4%.

It’s certainly not good news that expectations about the future are declining, but some hope can be gleaned from the fact that they’re falling at a much slower rate than the overall index.

Data Shows Consumers are Fragile

For the government’s spending to be worthwhile, consumer spending needs to return. | Source: Frederic J. BROWN / AFP

That’s a big deal for the U.S. stock market, which has been rallying on hopes that the nation can resume business as normal by the end of the summer. But for the economy to reopen, consumers have to be willing to get out there and spend. Worries about the future could prompt saving over shopping.

Richard Curtin, the chief economist working on the survey, warned that consumer sentiment hinges on a successful reopening among U.S. states.

Consumers’ reactions to relaxing restrictions will be critical, either putting further pressure on states to reopen their…

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