Consumer Expectations Improvingby Rob Stoll, CFP®, CFA Financial Advisor & Chief Financial Officer / May 27, 2020
This week we received survey data on the state of consumer confidence in the U.S. The punchline: Consumers are feeling a bit better. The Conference Board publishes a monthly survey of consumer confidence. As you might imagine, confidence slumped mightily in March and April on the back of the COVID-19 scare. But May’s survey points to a healing in consumer expectations. While the level of confidence is still down from where it was in January, consumer expectations of the future are getting noticeably better.
Probably the biggest surprise to us has been the sharp rebound in home purchases. The Mortgage Bankers Association (MBA) index of mortgage applications to buy a home – which excludes refinancing – hit a multi-year high this week!
The combination of record-low mortgage rates and a relatively strong consumer outlook has led the rebound.
This is surprising in an environment where the unemployment rate is heading towards 20%. But it highlights the idea that these job losses will be temporary and come back quickly once the economy reopens.
We’re witnessing one of the most remarkable economic periods in our country’s history. In less than 3 months’ time, we’ve gone from a white-hot economy to one near depression. And if these indicators hold true, the economy might just pick up where it left off!
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