The 2020 Recession and Consumer Confidence
The spending habits of people is dependent on three things; how money they make, the economy and their jobs, how they feel about their wealth. This is simple, when people feel safe and trust that their finance is safe, then they will spend money but when things look not safe and pretty unsure, people start to hold back to money. Consumers’ confidence is really important in an economy as it affects the flow of money, price of commodity, the stock market and the economy.
Consumers Confidence and Business
When people have enough money and consumer confidence is strong, they go on tours, travel for business, go to the mall, buy houses and do a lot of amazing things which grow businesses. Entrepreneur and business owners seize the opportunity of people spending money to create more businesses which create more jobs and employment opportunities, which then gives people more money as the jobs provide money for people to spend but when the confidence falls, the circle stops and the bubble burst. People starts to lose jobs, the businesses starts to lay off workers. It was said that consumer confidence dropped in the United States in April 2020.
Is Low Consumer Confidence Surprising?
It should not be a surprise, since the economy was out rightly shut down from all economic activities and people were asked to stay indoors. It isn’t surprising as countries and states were shut down, people also lost their jobs.
Will Consumer Confidence Bounce back?
It will but it isn’t as easy as it seems. First, whatever money is being spent by the government to the economy during this period is actually going into a dark hole until the underlined disease is eradicated. The economy will not just rebound when the government ask people to start work because there are also going to be a lot of underlying economic issues and people will need money to stand back. The government will be giving out free money in bail outs to companies, banks, and other organization.
If the pandemic isn’t solved soon enough, then the consumer confidence night be low for a while even after the government bails out company. Consumers will be the one to determine if their confidence is back with the economy or if they still have lags of debt to pay.
