SILVER SPRING, MD (AP) – A strong indicator of US consumer confidence collapsed in December, as rising coronavirus cases drew American optimism to a low summer level.
However, growing pessimism is now spreading during the crucial holiday season, which could make or break a number of retailers, airlines, restaurants in other sectors that were financially affected during the pandemic.
The December reading of 88.6 published by the Conference Board on Tuesday is a sharp drop from last month, which was revised down to 92.9 and is much worse than economists had expected.
It can be an ominous sign for an economy in which consumer spending accounts for 70% of all economic activity.
The Commerce Department reported last week that U.S. retail sales fell seasonally adjusted by 1.1% in November, the biggest drop in seven months and also worse than most expected. Weak economic data beats can provide a bleak preview of Christmas earnings, which can account for a quarter or more of a retailer’s annual sales.
The index measuring consumer assessment of current business conditions and the labor market fell sharply from 105.9 last month to 90.3 in December. Consumers’ short-term outlook for revenue, business and labor market conditions has risen slightly from 84.3 in November to 87.5 this month, possibly due to recent approvals for COVID-19 vaccines.
It remains to be seen how the $ 900 billion aid bill from Congress, adopted Monday and too late for the poll, will affect consumer behavior this winter.
The bill combines coronavirus control funds with financial aid for individuals and companies. It would establish an additional temporary allowance of $ 300 per week and a direct payment of $ 600 for most Americans, along with a new round of subsidies for severely affected businesses, restaurants and theaters and money for schools, health care providers and tenants who faces evacuation.