US consumers' confidence and responses to COVID-19 shock

Abstract

PurposeThis research's main objective is to investigate the relationship between consumption expenditure and consumer confidence in the USA and to study their effects on US economic revivalism during and after the coronavirus disease 2019 (COVID-19) shock.Design/methodology/approachThe authors use Michigan's monthly Consumer Sentiment Index and its five components from January 1978 to April 2020. The study is unique in quantifying the potential variations in US consumer confidence due to COVID-19 under different scenarios, by providing a projection until December 2021. It also estimates the time needed for recovery and offers guidance to policymakers on ways to contain the negative impacts of COVID-19 on the economy by restoring consumer confidence.FindingsAll scenarios show a gradual recovery of consumer confidence and consumption expenditure. This study recommends expansionary policies to encourage consumption expenditure to generate additional demand and boost economic growth and job creation.Practical implicationsThough this study is limited to the US consumer confidence index, it offers significant implications for marketers, customers and policymakers of other developed economies. The authors recommend expansionary economic policies to boost consumer confidence, raise economic growth and result in job creation.Originality/valueThe study is unique in quantifying the potential variations in US consumer confidence due to COVID-19 under different scenarios; by providing a projection until December 2021. It also estimates the time needed for recovery and guidance for policymakers on ways to contain the COVID-19 shock negative impacts on the economy by restoring consumer confidence.

Exploring the impact of COVID-19 pandemic on Americans time use related subjective wellbeing

“…Persons who continued going to work in 2021 are predominantly essential workers who performed specific tasks of specific duration such as maintenance. Earlier statistics indicate that consumer spending surged dramatically in 2021 due to the availability of vaccines ( Elmassah et al., 2022 ), we discovered that Americans actually spent less time on purchases. Although people faced fewer health concerns ( Park et al., 2022 ), they were still likely to complete their shopping activity faster avoiding exposure and making use of curbside picking up goods and services.…”

A Demand Systems Approach to Understanding Medium‐Term Post‐Pandemic Consumption Trends

“…Elmassah et al . (2022) verified this association between confidence and consumption using US consumption data over the period up to July 2020 with a reported elasticity of 3.9 (i.e., a 1 per cent decrease in confidence was associated with a 3.9 per cent consumption decline). To disentangle how concerns over health risks—as opposed to actual lockdown measures—might affect consumption, Andersen et al .…”

“…A common theme of early studies was that the pandemic negatively affected global consumer confidence and spending due to personal and financial concerns in the face of limited prospective national or global growth rates (Binder, 2020). Elmassah et al (2022) verified this association between confidence and consumption using US consumption data over the period up to July 2020 with a reported elasticity of 3.9 (i.e., a 1 per cent decrease in confidence was associated with a 3.9 per cent consumption decline). To disentangle how concerns over health risks-as opposed to actual lockdown measures-might affect consumption, Andersen et al (2020) compared consumer spending in Denmark where there was government mandated social distancing with Sweden where there were no initial lockdowns.…”

Product availability and stockpiling in times of pandemic: causes of supply chain disruptions and preventive measures in retailing

“…It should be noted that buying patterns for popular products could differ from the general consumption trends. In the U.S., consumers’ spending initially had decreased relative to its pre-pandemic levels but showed a gradual increase afterwards (Elmassah et al, 2022 ). The lead-time variability will remain a serious issue as the pandemic does not appear to reverse the trend of the global sourcing any time soon (Koerber & Schiele, 2021 ).…”