A new survey from the Conference Board reveals that consumer confidence in the United States has fallen to a new six-month low. The survey, which covers data from all of August, suggests that concerns over the Delta variant of COVID-19 — which has caused cases to soar around the country — have hindered consumers’ desire to spend money. Higher inflation and low confidence in the labor market are also to blame for this new confidence low.
Consumer confidence helps economists understand what direction the economy is going in. If consumer confidence is low, then chances are spending will slow down — and money put into the economy will slow down as well. Business activity will also falter, and all of this will affect the economy as a whole.
According to the survey, consumers are feeling less than optimistic about the labor market, as well as about the COVID-19 pandemic. As a result, confidence has fallen. Confidence has also fallen in the housing market for consumers, as the survey reveals that consumers are less inclined to buy a home because of high prices and a small number of homes to choose from. Because of material shortages, the rate of new homes being built has slowed down, and there simply aren’t a lot of houses available to buy on the market at the moment (for new and previously owned homes).
Consumers are also less inclined to purchase or invest in any big items, such as cars. While the auto industry actually did quite well in 2020 while the pandemic was fully underway, 2021 has been difficult for the industry as a whole. For one, the semiconductor chip shortage (which is a global issue) has really begun to hamper the production of automobiles, forcing some factories to shut down or slow down manufacturing.
Many consumers bought cars early on in the pandemic, so the need for cars as a whole has lessened this year. However, cars and homes aren’t the only things consumers are softening on. According to the Conference Board survey, consumers also aren’t purchasing any big appliance items — such as washing and drying machines — at the moment.
Even with these new analyses, there is ample data to suggest that the economy isn’t going to slow down. Consumer confidence may be at a new six-month low, but there are still consumers who will help drive the economy. Many Americans are still planning on going on vacation sometime this year, so economists expect that travel-related industries will help the economy continue to grow.
The Delta variant has, however, slowed down certain aspects of travel in the last few weeks, so consumers traveling may not be enough to help the economy experience a large growth this year. Consumers are still shifting from spending money on goods to services.
While 2021 may still experience economic growth, this survey does suggest that the economy could be slowing down. As lingering COVID concerns and labor market struggles continue to hamper consumer confidence, Americans are less likely to spend a lot of money for the rest of the year. Economic growth will more than likely still occur, just to a lesser extent.