The University of Michigan revealed a decade-long record drop in key Consumer Sentiment Index scores. Americans were spoiled by a new strain of coronavirus, reports CNBC.
Index, according to preliminary data, in August, the index will fall to 70.2 points against forecasts of 81.3 points. In July, the index was 81.2 points. Thus, the index is down 13 percent for the month. Such large-scale collapses of the index have been extremely rare, economists stress.
вЂњIn the last half-century, the Sentiment Index has suffered larger losses in only six other surveys, all related to sudden negative changes in the economy,вЂќ said Richard Curtin, chief economist at Michigan's Surveys of Consumers.
In a year and a half of the pandemic, the lowest value was recorded in April 2020. At that time, the index dropped to 71.8 points. Another significant drop in the Consumer Sentiment Index was recorded in October 2008 and was caused by the financial crisis.
The current jump was due to the fact that the вЂњdeltaвЂќ variant quickly spread across the U.S., forcing some states and cities to bring back anti-COVID restrictions. Hospitals in many southern states are reporting a shortage of beds to admit patients.
According to Curtin, health concerns are likely to cause a short-term decline in consumer confidence. Optimistic sentiment will return once the coronavirus situation stabilizes.
вЂњConsumers correctly reasoned that economic indicators would decline over the next few months, but the extraordinary spike in negative economic assessments also reflects an emotional reaction, largely because of dashed hopes that the pandemic would end soon,вЂќ Curtin said.
In the summer of 2020, Russia ranked among the top five worst performers in the Consumer Sentiment Index. Back then, only 10 percent of those surveyed were optimistic.