Consumer Sentiment Stops Tumbling, Remains Low
Consumer research firm Morning Consult reported Thursday morning that its consumer sentiment index ticked up from 111.9 on March 3 to 112.0 on March 4. Based on its daily surveys, this is the first in nine straight days that the consumer sentiment has improved.
Of the index’s two components, consumer expectations of future business conditions inched up from 111.9 to 112.1. Between February 9 and February 23, the index had slipped by an average of 0.08 points a day. From February 24 to March 2, the index had plunged 10 times faster, dropping by a daily average of 0.8 points per day. This component of the consumer sentiment index peaked at 116.5 on February 13.
The current conditions component of the sentiment index peaked at 114.9 on February 17 and slipped from 111.9 on Wednesday to 111.8 on Thursday.
Major U.S. equities indexes rose sharply Wednesday, with the Dow Jones industrials leading the way, up 4.5%. Much of the gains are being wiped out Thursday, with the Dow down 3.25%, the S&P 500 down 3.1% and the Nasdaq Composite down 2.84%. The VIX volatility index reached a 52-week high of 49.48 on February 28, but it has since pulled back to around 39.85 in the early afternoon Thursday, March 5.
Morning Consult’s analysts note: “Elevated levels of stock market volatility exert downward pressure on consumer confidence. … Continued stock market volatility is highly likely given the coronavirus outbreak, fears of a recession and political uncertainty, which makes it unlikely that consumer confidence will rebound in the near-term.”
The Morning Consult index scores are based on the firm’s daily survey of some 7,500 U.S. adults, and it is significantly higher than it was at this time last year. Morning Consult asks the same questions of its survey respondents as does the University of Michigan’s twice-monthly Survey of Consumers. The difference is in the number and method of the survey. The Michigan sentiment index is based on 600 telephone interviews with U.S. adults while Morning Consult’s results are based on an ongoing survey comprising 7,500 daily interviews and 210,000 monthly interviews, all conducted online.
Morning Consult also noted Thursday that, by historical standards, its consumer sentiment index is experiencing “muted” volatility: “The absolute average daily change over the past two days is 0.05, which is less than half the average over the past two years.”
Iran, South Korea and Italy had more reports of new cases of the disease on Wednesday than did China, where 120 new cases were reported, bringing the country’s total to 80,422. The death toll in China was 2,984. The rest of the world has reported 214 deaths, including six from the Diamond Princess cruise ship. More than a third of those deaths (77) have occurred in Iran.