U.S. consumer sentiment edges up in May but worries about social isolation grow
U.S. consumer sentiment rose unexpectedly in early May after a record plunge a month earlier as emergency assistance payments improved household finances hurt by mass layoffs from the coronavirus crisis, a survey released on Friday showed.
The University of Michigan’s preliminary reading of its twice-monthly consumer sentiment survey also found that worries about social isolation from widespread stay-at-home orders imposed to control the spread of COVID-19 are growing as a major concern about the pandemic.
The survey’s overall index on consumer sentiment edged up to 73.7 from an eight-year low of 71.8 in April when closures of non-essential businesses led to unprecedented job losses. April’s fall was the largest in survey history.
May’s reading was above the median forecast of 68 among economists polled.
“Despite these gains, personal financial prospects for the year ahead continued to weaken, falling to the lowest level in almost six years, with declines especially sharp among upper income households,” survey director Richard Curtin said in a statement.
The survey’s barometer of current economic conditions rose, while the expectations index dropped to the lowest in more than six years.
For a second month, the survey sought consumers’ opinions on their greatest concerns arising from the pandemic: the threat to their health; the required social isolation; or the impact on family finances.
In May’s preliminary survey, health remained the top concern at 57%, although down somewhat from 61% in April. Meanwhile, concern about social isolation rose to become the No. 2 major concern, with 21% of respondents labeling it their top worry versus just 14% a month last month.
Those identifying finances as their top concern slid to 17% from 22%.
“The original hypothesis was that as their primary concerns shifted from health to finances, consumers would become less accepting of constraints on reopening the economy,” Curtin said.
“While these shifts were quite small, they indicate the growing costs of social isolation and its potential to shift opinions about reopening the economy.”
A number of U.S. states have moved to reopen some parts of their economies this month, and pressure is growing on several state governors to accelerate the process in the face of massive job losses. Since mid-March, more than 36 million Americans have filed for unemployment benefits.