A surprising improvement in the jobs market and states reopening for business are combining to lift the spirits of U.S. consumers, according to data from a University of Michigan consumer survey released Friday (June 12).
The widely-watched gauge of consumer sentiment posted its biggest gains in four years, showing a jump of 9.1 percent in June over May, hitting 78.9.
In a statement, Richard Curtin, chief economist and director of the University of Michigan survey, attributed the rise to last week’s surprising jobs report and to moves by states to reopen the economy after the coronavirus shutdown this spring.
The U.S. Bureau of Labor Statistics last week reported the U.S. had regained 2.5 million jobs, pushing the jobless rate to 13.3 percent.
Economists had been bracing for another big jump in unemployment that would boost the jobless rate to more than 19 percent, a level not seen since the Great Depression.
“Consumer sentiment posted its second monthly gain in early June, paced by gains in the outlook for personal finances and more favorable prospects for the national economy due to the reopening of the economy,” Curtin said. “The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than in any other time in the long history of the Michigan surveys.”
Still, many consumers are not convinced the economy is completely out of the woods yet, with nearly half anticipating a second drop over the longer term, Curtin said in his statement. The data falls in line with the most recent PYMNTS consumer study, which shows while consumers are eager for the economy to reopen, lingering uncertainty over a multitude of factors dampens that enthusiasm.
One big reason consumers cite for their concerns about another big economic drop looming in the future is the potential for a second wave of the coronavirus, reinforced in recent days by reports of spikes in infection rate in many Sun Belt states.
“Few consumers anticipate the reestablishment of favorable economic conditions anytime soon,” Curtin said. “Each of these factors [has] increased the uncertainty consumers now attach to their expectations.”