There is no doubt that an economic recovery is unfolding. Since the beginning of the year, initial claims for unemployment benefits have been in general decline, falling from 900,000 per week to roughly 370,000 recently.
This drop in unemployment claims coincides with a steady increase in consumer confidence.
As measured by the weekly values of the Langer Research Consumer Comfort Index – which asks Americans to rate the national economy, their personal finances and the buying climate – it wasn’t until March and April that more households than not were convinced of the efficacy of both the vaccination program and the economic recovery.
(Note: the Langer index goes from 0 to 100, with values of greater than 50 representing net positive answers to the survey questions. We attribute the decrease in consumer confidence in the latest week to concerns over the spread of coronavirus variants.)
In the months ahead, we expect those jobless claims to continue their approach to traditional levels of 210,000 per week.
Once schools and businesses are fully open, families should be better able to balance child care costs and salary requirements, and we anticipate employment and wages to reach a new equilibrium.
At the same time, we anticipate consumer confidence to remain positive with improvements in the labor market and household sentiment leading to a commensurate pickup in spending and economic growth later this year.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.