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Americans, overall, are optimistic about the long-term prospects for post-pandemic economic recovery. But what’s happening to their money right now can keep some from feeling more optimistic.
Consumer confidence hit another pandemic-era high this week, hitting 62.4 (out of 100) on the Forbes Advisor-Ipsos US Consumer Confidence Weekly Tracker. That is 10 points above the pandemic average and higher than the value at the beginning of March 2020.
The survey carried out by Ipsos, measures consumer sentiment over time.
While general confidence has flattened slightly since late spring, it has come a long way in some of the worst periods of the pandemic. In December 2020, confidence struggled to climb above the 40 point area.
Ipsos measures overall consumer outlook along with four subgroups for specific areas of personal finance: jobs, future expectations, investments, and current financial condition.
One of these measures is slightly lower than the other.
The “current index,” which measures respondents’ current financial situation, the local economy, purchasing, employment and investment confidence, was the lowest this week at 57.1 (out of 100).
Current financial confidence by income group points on K-shaped recovery
The current index has seen some modest gains over the past few weeks but is still well below general consumer confidence. And it’s lower than general confidence during the pandemic.
And while Americans are optimistic about their finances – this week, 67% said they expect the economy to recover quickly if pandemic restrictions are lifted – it’s clear that they will not be so in their current situation feel well.
A look at the current index by income group shows indicators of the K-shaped recovery Economists feared during the pandemic: that wealthier Americans will recover quickly, while less wealthy people will have a longer way to go to make up for their losses.
This week, the current index for people living in households with an annual income of less than $ 50,000 was 48.8. People in households earning between $ 50,000 and $ 100,000 had a current index of 58.6, 10 points higher. And those with the highest household incomes of more than $ 100,000 came in at 65.5 – nearly 20 points more than the low-wage earners.
Verily, the cards seem to be stacked against low wage earners at the moment.
From this weekend, States will withdraw from the federal unemployment benefit grant, which cuts weekly unemployment benefits by $ 300 per week for some.
The unemployment rate fell to 5.8% in May, but is still above pre-pandemic levels. Last week, 376,000 new applications filed for unemployment; before the pandemic, around 220,000 a week was the norm.
The Bureau of Labor Statistics announced a notable Thursday Rise in the consumer price index for May confirming some inflation fears that could slow post-pandemic recovery. Consumers today are generally paying 5% more for the same items than they were a year ago. Announcement from Thursday marks the largest increase in 12 months in consumer prices since mid-2008, although today’s prices aren’t necessarily higher than pre-pandemic prices – prices were lower around this time a year ago, making the jump even more shocking.
But for lower-income households, price increases – if they hang out for long periods – could be another barrier to financial recovery.
Survey methodology: Ipsos, which surveyed 938 respondents online on June 8th and 9th, only made the results available to Forbes Advisor. The survey is conducted weekly to track consumer sentiment over time. A series of 11 questions is used to determine whether consumers assess the current economic situation positively or negatively and where it will develop in the future.