Consumer Confidence Points To Rough Retail Holiday Season

consumer pandemic

A new spate of data show consumer confidence might be on shaky ground — even as we head into the all-important holiday shopping season.

As reported by the Conference Board, the overall index came in at 92.6 in July, which, as reported by Bloomberg, missed expectations of a 95 reading. The latest tally was also down from a 98.3 measurement for June.

At a high level, consumers seem to be feeling less sanguine about what lies ahead — chiefly in terms of the economy and job prospects. That muted outlook may translate into reduced spending.

“Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects,” Lynn Franco, senior director of economic indicators at the Conference Board said in a statement. “Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending.”

With a bit more granular detail, the gauge of consumer expectations was off by 14.6 points, to a 91.5 reading. That measure, according to the Conference Board, encompasses how consumers view income, business and labor prospects.

The board reported that the percentage of consumers expecting business conditions will improve over the next six months declined from 42.4 percent to 31.6 percent. The percentage of individuals anticipating fewer jobs available in the near term increased from 14.4 percent to 20.3 percent.

And as for income, the percentage of those surveyed by the Conference Board expecting an increase was relatively unchanged at 15.1 percent.

“The proportion expecting a decrease rose from 14.1 percent to 15 percent,” the board reported.

Gainful employment, of course, determines income, which drives a propensity to spend. The percentage of those who expect jobs to be available in the months ahead slipped from 38.4 percent to 30.6 percent. The attitude toward jobs darkened a bit as those expecting fewer jobs in the months ahead increased from 14.4 percent to 20.3 percent, according to the Conference Board.

The six-month timeframe leads us, of course, into the end of the year and the critical holiday shopping season. Two bellwethers have seemingly left the (unofficial) kickoff to that holiday spending season a bit … murky.  As detailed in a recent Whole Paycheck tracker, Walmart has said it will close for Thanksgiving, but has yet to announce plans for that weekend. As for Amazon, of course, Prime Day plans are still under wraps.

At an individual (or family) level, PYMNTS research has found that 60 percent of Americans live paycheck to paycheck. And in the newest $1 trillion stimulus package unveiled this week by Senate Republicans, it’s been proposed that additional unemployment benefits be cut to $200 a week from the current $600. There would also be a $1,200 flat payment for Americans who make under $120,000. Additionally there would be a  second round of small business loans from the Paycheck Protection Program (PPP).

Research from the Federal Reserve Board of Governors, Massachusetts Institute of Technology and ADP Research Institute has estimated the PPP has saved 2.3 million jobs, as measured through early June — and boosted employment at qualifying companies by an estimated 2 percent to 4.5 percent. PYMNTS research this past month showed that a majority of the small and medium-sized businesses (SMBs) that populate “Main Street” in the USA have experienced cash flow shortages throughout the pandemic. That means 37 percent of firms’ owners surveyed have used personal funds to keep operations running — and they do not see a recovery till the beginning of 2021.

That dovetails with findings of when consumers expect to see a recovery, as, queried, by PYMNTS, they stretched out that expected timeframe by more than 50 days (versus the previous survey — what a difference a month makes!) to well into the first quarter of next year.

Against that backdrop we may be headed for a long, cold winter … and a chill at the register.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.