When a recession occurs, consumer confidence plummets. In the ensuing recovery, consumer confidence often comes back as the economic picture becomes much clearer. This seems obvious as we witnessed this in the dot-com bubble and the Great Recession, but the recent recession has been a bit different.
As we all know, the 2020 recession was caused by a pandemic instead of a pure economic disaster, which leaves it in a different subgroup. Pandemics aren’t necessarily one and done, which had an impact on consumer confidence. With 2 major surges after the first one, confidence slowed down as the threat was becoming larger. However, vaccines came to the rescue, helping open American businesses, giving consumers more belief in the economy. The labor market, GDP, and the stock market have been flourishing throughout 2021, which has had a major impact.
On Tuesday, the monthly consumer confidence report was released, giving us more insight into the current economic conditions. For the first time in 2021, consumer confidence fell due to the job slowdown and the risk of rising prices due to inflation. Even with this, the number is sitting near post-pandemic highs. Another highlight of the report was that consumers were less likely to purchase homes and appliances in the next few months. Housing prices have skyrocketed during 2021, so that makes sense. All in all, the data showed that economic growth is continuing, but people believe that it’s decelerating, which has been the overall expectation for many analysts. What do you think about the data?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.