U.S. consumer sentiment climbed by 2.7 points last week as the economy slowly progress, marking the highest one-week gain.
U.S. consumer confidence is seen slowly improving despite the ongoing health and economic crisis as the consumer comfort index gauged by Bloomberg rose the most in 11 years. The upward trend, however, is still below pre-pandemic levels and requires significant progress before it returns.
US consumer comfort index jumped to 47.8
As per Bloomberg’s U.S. consumer comfort index published last week, the public’s sentiment hit a 47.8 mark, making a 2.7 jump from 45.1 prior to the increase. The upward trend is also the highest jump recorded in 11 years.
The country’s consumer confidence is now 13.1 points higher than March and is 19.5 points above January’s index.
The country’s comfort in the buying climate jumped to a five-month high of 42 coming from 39.1 points, on the one hand. Bloomberg’s State of the Economy index also climbed as much as 37.7 from 34.6.
Meanwhile, the consumer’s personal finance reached a high of 63.6 compared to its previous measure of 61.5.
Wide gap between two classes
The primary drivers of the rising consumer comfort, as per Bloomberg, are said to be Americans and men who belong in the upper-class families. Yet it also stressed the widening disparity between the two opposing classes—the upper-income and lower-income households.
For households earning $100, 000 or more, for instance, has its consumer sentiment jumped to more than 10 points in the past two weeks. But the index for those whose income is $50, 000 or less has remained unmoved since mid-July.
Index is still below pre-pandemic size
Despite the increase, the recent measure also presents lower-than-before consumer comfort. Reports also claim that for the index to return to its pre-pandemic size, significant progress is needed to support the U.S. economy.
But the problem is that several economic figures anticipate another economic downturn, particularly if the national government would not pass another fiscal aid.
Per a survey of economists polled by the National Association for Business Economics, two-thirds of the participants believe that the U.S. economy is still in recession, while nearly 80% saw a one-in-four probability of a “double-dip recession.”
The Ex-president of Fed Atlanta also echoed a similar sentiment yet explained that appropriate fiscal action can help thwart a second downturn.
Earlier this month, a report released by the Congressional Budget Office also showed a grim outlook of the country’s federal debt. The data suggests that by next year, debt held by the public will surpass the size of the U.S. economy.
Brian Riedl, a senior fellow from Manhattan Institute admitted that the “federal debt to GDP ratio is totally unsustainable” yet added that Congress should do everything to keep the economy afloat.
“In the short term, you have to spend what it takes to minimize the recession and keep the economy afloat,” Riedl told The Wall Street Journal.