Apr 13, 2020 - Economy & Business

Why the steepest U.S. consumer sentiment drop ever is still too optimistic

Dion Rabouin, author of Markets
Data: University of Michigan; Chart: Axios Visuals

U.S. consumer sentiment suffered a record decline in April, according to the latest poll from the University of Michigan, but respondents are still irrationally confident about the future, the survey's director says.

What happened: The survey's gauge of preliminary consumer sentiment sank 18 points to 71, its lowest since 2011.

  • A measure of current conditions plunged by more than 31 index-points, nearly twice the previous record, while a measure of future expectations dropped by just under 10 points.

What they're saying: "[A]nticipating a quick and sustained economic expansion is likely to be a failed expectation, resulting in a renewed and deeper slump in confidence," Richard Curtin, Michigan's surveys of consumers chief economist, said in a statement.

  • "Consumers need to be prepared for a longer and deeper recession rather than the now discredited message that pent-up demand will spark a quick, robust, and sustained economic recovery."
  • "Continued declines in the seven-day average Sentiment Index can be expected in the weeks ahead (see the featured chart). Sharp additional declines may occur when consumers adjust their views to a slower expected pace of the economic recovery."

Go deeper: The next economic crisis will hit states and cities

Go deeper

South Korea and Taiwan show stifled consumer demand after coronavirus lockdowns

People walking through a park in Seoul on May 24. Photo: Ed Jones/AFP via Getty Images

Looking at the economies of South Korea and Taiwan leads to a discomforting takeaway: "Reopening isn’t going to be an economic cure-all," Matthew C. Klein writes for Barron's.

What it means: "Both countries contained the virus better than the U.S., yet consumers in those countries remain reluctant to spend and venture out," Klein notes.

Black workers overrepresented in essential work during coronavirus pandemic

Reproduced from Economic Policy Institute; Chart: Axios Visuals

On a percentage basis more white workers have lost their jobs since February, but that has largely been because black workers in the U.S. are much more likely to work front-line jobs considered essential during the coronavirus pandemic.

By the numbers: Black workers make up about one in nine workers overall, but about one in six front-line-industry workers, according to a study from the Center for Economic and Policy Research.

Trump's troubles grow, spread

Photo: Tasos Katopodis/Getty Images

President Trump is confronting the most dire political environment of his presidency, with his support dropping fast from Texas to Wisconsin, even among his base of religious and older voters. 

Why it matters: Top Republicans tell Axios that Trump's handling of the nation's civil unrest, including his hasty photo op at St. John's Church after the violent clearing of Lafayette Park, make them much more worried about his chance of re-election than they were one week ago.