The stock market and economy have both exhibited different degrees of v-shaped patterns over the last year, but one area where the v-shaped pattern has been noticeably missing involves Consumer Confidence. The latest read on consumer sentiment for the month of February showed a modest improvement from January’s downwardly revised reading of 88.9. While economists were forecasting the headline reading to come in at a level of 90.0, the actual reading showed a modestly larger increase coming in at 91.3. Even as financial conditions and the economy improve and vaccines roll out, though, consumers remain stuck in a rut.
Breaking out confidence by Present Conditions and Expectations shows the same trend. While sentiment towards the present has seen a bigger bounce off the lows, expectations continue to trend lower. At first glance, this seems strange given the improved trends regarding COVID case counts and the rollout of the vaccines, but then again, if you told most Americans a year ago that we’d still be at the current level of restrictions and closures, they wouldn’t have believed you. Maybe the fact that expectations remain so muted is just consumers taking the attitude of, “I’ll believe it when I see it.”
Another reason for the muted sentiment is the fact that jobs simply aren’t there yet. Like overall confidence, the ‘Jobs Plentiful’ index has barely bounced off its lows. As long as jobs remain hard to find, don’t expect consumer sentiment to improve much.
One surprising aspect of this month’s report concerned sentiment towards the stock market. While there’s an overall abundance of bullish sentiment, the percentage of consumers in this survey expecting higher stock prices is barely higher than the percentage expecting lower stock prices. Normally, when the stock market makes record highs, consumers are bullish towards the market. This month, though, the lack of consumer enthusiasm has even made its way into sentiment towards the stock market. Click here to view Bespoke’s premium membership options for our best research available.