U.S. consumer sentiment suffered a record decline in April as coronavirus infections grew, thousands of businesses closed and millions of Americans were laid off.
The University of Michigan’s preliminary sentiment index plummeted 18.1 points to 71, according to data Thursday. The measure stands at its lowest since 2011 and was weaker than the median projection of 75 in a Bloomberg survey of economists.
The gauge of current conditions slid by the most on record to 72.4, while a measure of expectations dropped 9.7 points to 70.
Social-distancing measures and closures of non-essential businesses across most U.S. states have resulted in an unprecedented 16.8 million applications for jobless benefits in the past three weeks. Consumer spending is projected to collapse and the economy is likely in a recession.
“Consumers need to be prepared for a longer and deeper recession rather than the now discredited message that pent-up demand will spark a quick and robust economic recovery,’’ said Richard Curtin, director of the survey, in a statement. “Sharp additional declines may occur when consumers adjust to a slower expected pace of the economic recovery.’’
The survey was conducted March 25 through April 7, a period that includes the record surge in applications for jobless benefits and stock-market volatility. While it also included a massive relief package from government, getting funds to consumers and business has proved difficult because of the enormity of the task.
Surging unemployment was spontaneously mentioned by two-thirds of consumers, just below the nearly three-quarters of respondents in February 2009.
The share of respondents who reported improved finances dropped to 36% this month from an all-time peak of 58% in February, the university said. Consumers expected a decline of 0.6% in their incomes in the year ahead, the biggest drop ever recorded, though the survey indicated respondents felt the impact would be temporary.
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