Mike Blake/Reuters
- US consumers’ economic confidence sank the most since the financial crisis in March, according to Bloomberg’s Consumer Comfort index.
- The proportion of respondents saying the economy is getting worse jumped by 13 percentage points to 34%, its highest level since October 2013.
- The slump in consumer confidence threatens to stifle one of the economy’s biggest drivers as Americans cut spending and fuel a demand slowdown.
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US consumers’ confidence in the economy is tanking as the coronavirus strangles spending activity and closes business throughout the country.
Bloomberg’s Consumer Comfort gauge slipped 11 points in March as virus cases spiked in the US. The decline is the biggest since October 2008, when the economy sat mired in the financial crisis. The latest reading also follows a sharp jump in February that placed the confidence metric at its highest level in more than a year, Bloomberg reported.
A drop in consumer comfort threatens to suppress the economy’s biggest driver. Consumer spending accounts for two-thirds of economic activity, and the virus’ hit to demand will likely create revenue shocks across a wide range of sectors.
An early indicator hinted Thursday that the coronavirus hit may be worse than economists expected. US jobless claims spiked to a two-year high in the week ended March 14, soaring to 281,000 and surpassing economists’ 220,000 estimate. The latest data doesn’t yet account for the business closures and stay-at-home orders that are likely to drive additional claims.
The portion of respondents saying the economic situation is worsening jumped 13 percentage points to 34%. The figure stood at its lowest level since 2002 just one month ago, when the stock market peaked and the US remained fairly isolated from the coronavirus pandemic.
Since hitting its mid-February highs, the stock market tumbled into bearish territory at its fastest-ever pace amid virus fears and the oil-market conflict between Saudi Arabia and Russia. The S&P 500 sits roughly 28% off of its February 19 record high and at its lowest level since 2017.
The financial market turmoil and intensifying economic risks have prompted numerous banks to forecast a US recession arriving before the end of the year. Deutsche Bank, JPMorgan, Goldman Sachs, and Morgan Stanley all expect economic activity to plummet in the second quarter before recovering later in 2020.
Bank of America’s economists went a step further in a Thursday note, saying the US has already fallen into a recession that will last through the second quarter.
“Jobs will be lost, wealth will be destroyed and confidence depressed,” Michelle Meyer, the bank’s head of economics, said.
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