“Consumer spending is 70 percent of GDP,” said Torsten Slok, chief international economist at Deutsche Bank Securities. “An important part of what drives your and my consumer spending is your wealth and whether you have a job.”
The decline was not as bad as some economists were expecting — consumers were surveyed between March 1 and March 18 — but with more than 3 million people joining the unemployment ranks in just one week this month, that number is sure to drop much further.
The survey period “is almost entirely before the shutdowns/mass layoffs began,” said Megan Greene, an economist at Harvard Kennedy School. “I would also expect the next set of consumer confidence numbers to be a whole lot worse.”
Consumer confidence was consistently one of the bright spots in the U.S. economy under Trump before the pandemic hit; even when business investment shrank and the manufacturing entered a recession, healthy spending by Americans helped drive unemployment down to lows not seen since the 1960s.
That confidence could be difficult to recover, depending on the effectiveness of the relief measures pursued by Congress and the administration, economists say.