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This article first appeared in the Morning Brief. Get the Morning Brief delivered straight to your inbox Monday through Friday before 6:30 a.m. ET. Subscribe
Monday August 16, 2021
Consumer confidence collapses in August
Our Morning Brief newsletter on Friday morning noted that a Bank of America study suggested that a slowdown in consumption would likely be reflected in the July retail sales report, due Tuesday morning.
Hours later, hard data on how consumers think their economy is (as of mid-August) showed sentiment had fallen off a cliff during the month.
The University of Michigan’s preliminary reading on consumer sentiment for August showed an 11-point drop in the overall index to a reading of 70.2, the lowest reading since the start of the month. pandemic and the lowest overall level in the series since 2011. The drop was one of the largest on record for the index, which dates back more than 50 years.
“[The] only larger drops in the sentiment index occurred during the shutdown of the economy in April 2020 and during the depths of the Great Recession in October 2008, “said Richard Curtin, chief economist of the survey. from consumers at the University of Michigan.
Curtin added: “[The] the losses covered all aspects of the economy, from personal finances to the economic outlook, including inflation and unemployment. There is no doubt that the resurgence of the pandemic due to the Delta variant has encountered a mixture of reason and emotion. Consumers have rightly reasoned that the performance of the economy will be diminished over the next few months, but the extraordinary increase in negative economic assessments also reflects an emotional response, mainly due to disappointed hopes that the pandemic would end soon. “
So when we ask what bothers consumers, Curtin’s comment suggests that “all of the above” is an appropriate response. Even without new, highly restrictive measures related to the spread of the virus, delayed return-to-office plans, mask warrants in schools and potentially altered travel plans, all are a reminder that the virus is staying with us.
Combine that with inflation playing a bigger role in daily life than it has in decades and the prospect of further consumer stimulus sitting near zero, and it’s not hard to see how a field assessment of the economy has changed rapidly. these last weeks.
And in addition to the government’s July retail sales report released on Tuesday, the coming week will feature results from a number of major retailers, including Target (TGT) and Walmart (WMT). These reports will give us some insight into how these giants survived the enthusiastic economic reopening of spring.
But analysts will also want updates on how these retail giants have seen customer behavior change in recent weeks. And recent data suggests these leaders will have a lot to say.
By Myles abroad, journalist and presenter for Yahoo Finance Live. Follow him on @MylesUdland
What to watch today
Economy
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8:30 am ET: Empire manufacturing, August (28.5 expected, 43.0 in July)
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4 p.m. ET: Total net ICT flows, June ($ 105.3 billion in May); Long-term net ICT flows, June (- $ 30.2 billion in May)
Earnings
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4:05 p.m. ET: Roblox (RBLX) Expected to Report Adjusted Earnings of 24 cents per Share on Revenue of $ 628.00 Million
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4:05 p.m. ET: Danimer Scientist (DNMR) Expected to Report Adjusted Losses of 7 cents per Share on $ 11.8 Million in Revenue
Also: Retail Sales, Target and Walmart Revenue: What to Know This Week
Top news
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