There does some to be an apparent contradiction in the findings of two recent surveys.
An ABC News/Ipsos poll shows a sharp decline in Americans’ optimism.
- Currently, 45% are optimistic about where the country is headed over the next year, while 55% are pessimistic.
- This marks a nearly 20-point decline in optimism from late April, the last time this question was asked. At that time, 64% were optimistic about the year ahead.
- This growing pessimism is happening across all age groups, income levels, educational attainment, and partisan affiliation.
Yet, the Conference Board reports consumer confidence remains strong.
The Conference Board Consumer Confidence Index® was relatively unchanged in July, following gains in each of the prior five months. The Index now stands at 129.1 (1985=100), up from 128.9 in June. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose from 159.6 to 160.3. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—was virtually unchanged at 108.4, compared to 108.5 last month.
Consumer confidence was flat in July but remains at its highest level since February 2020 (132.6),” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in Q3 is off to a strong start. Consumers’ optimism about the short-term outlook didn’t waver, and they continued to expect that business conditions, jobs, and personal financial prospects will improve. Short-term inflation expectations eased slightly but remained elevated. Spending intentions picked up in July, with a larger percentage of consumers saying they planned to purchase homes, automobiles, and major appliances in the coming months. Thus, consumer spending should continue to support robust economic growth in the second half of 2021.”
We suspect the findings aren’t as dissonant as they appear. The ABC News/Ipsos Poll focused largely on politics, particularly the Biden administration’s handling of the pandemic, economy, immigration and crime. And partisan responses differed predictably with a swing toward pessimism among independents. And, particularly with the pandemic, the news has been mixed and uncertainty is rising.
Conversely, the consumer survey is a monthly temperature check by the Conference Board. While concerns about crime, Covid and international affairs may be rising, as reflected in the other survey, Americans are still seeing an economy reopening, job opportunities abounding, and wages increasing. Pent-up demand still appears to be driving consumer spending.
