US consumer sentiment jumps more than expected in June: survey

Washington

US consumers were feeling surprisingly confident in June as states began to roll back coronavirus shutdowns and some unemployed workers went back to their jobs, according to a survey released yesterday. The University of Michigan consumer sentiment index jumped to 78.9 from 72.3 in May, much better than economists had expected.

“Consumer sentiment posted its second monthly gain in early June, paced by gains in the outlook for personal finances and more favorable prospects for the national economy due to the reopening,” said Richard Curtin, chief economist of the Survey of Consumers.

“The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than at any other time in the long history of the Michigan surveys.” The index of current economic conditions climbed to 87.8 per cent from 82.3 pc in May, while consumer expectations rose by more than seven points to 73.1 pc.

The world’s largest economy is muddling through its reopening process, with states easing the lockdowns imposed in mid-March to stop the spread of the virus that led to tens of millions of layoffs. The reopenings and the government aid program for small businesses were credited with adding 2.5 million jobs in May and lowering the unemployment rate to a still-high 13.3 pc.

But the virus has resurged in parts of the country, which has seen the world’s worst outbreak with nearly 114,000 deaths. Though consumers are expecting things to get better, Curtin said few anticipate a return to normalcy “anytime soon.” Consumers expected the coronavirus to cause another downturn, and persistently high unemployment to slow the recovery.

“Bad times financially in the economy as a whole during the year ahead were still expected by two-thirds of all consumers, and a renewed downturn was anticipated by nearly half over the longer term,” he said. Ian Shepherdson of Pantheon Macroeconomics warned the expiration of expanded unemployment benefits in the $2.2 CARES Act stimulus bill passed to cushion the blow from the virus could reverse the progress made in recent weeks.

“These benefits currently are scheduled to expire at the end of July... at which point sentiment could easily roll over again, because millions of people will still be out of work,” he said.