The December decrease in U.S. consumer confidence shows how important fiscal aid for households provided by Congress’s new $2.3 trillion spending bill is to consumers. The Conference Board Consumer Confidence Index, which is based on a survey of a random sample of U.S. households, fell short of expectations, down 7.8% to 88.6 from a revised 92.9 a month earlier, its lowest reading since August. The fall in confidence was largely concentrated on households with annual incomes under $125,000.
The December measurement is consistent with a muted holiday shopping season amid a resurgent spread of the coronavirus and short-term economic uncertainty. It also shows that the narrative of pent-up demand may be limited to those upper income households whose incomes are more closely tied to jobs in sectors of the economy less impacted by the virus.
The stimulus package provides aid to those households where confidence is on the decline in the form of direct payments of $600 to individuals who earn up to $75,000 per year or $1,200 to families making up to $150,000 per year. These direct payments, coupled with extended unemployment benefits, small business relief plans, and public health and education measures, will help extend a financial bridge for these households until a stronger recovery and as vaccines become more widely distributed.
