US: Consumer sentiment tumbles in March, the largest decline since October 2008 – Wells Fargo

Data released on Friday, showed the Consumer sentiment index from the University of Michigan dropped 11.9 points in March. The slip is the latest affirmation that consumer spending will be facing unprecedented headwinds, explained analysts at Wells Fargo.

Key Quotes: 

“Not since the height of the credit crunch in October 2008 has the University of Michigan’s survey of consumer sentiment reported a larger plunge. A preliminary read of this measure just two weeks ago put confidence at 95.9 and in the short period of time since, the measure has fallen to 89.1. The slip is the latest affirmation that consumer spending will be facing remarkable and truly unprecedented headwinds as large swaths of the country get used to social distancing and either by choice or by law, remain at home.”

“Sentiment around household finances compared to a year ago declined 13.1 points, which also marks the largest decline since October 2008 (-26 points). This is undoubtedly tied to job losses as well as the recent swoon in equity markets. Household finances sentiment has further room to fall, as more jobs are lost due to temporary business closures, which will weigh on overall sentiment.”

“Assuming the country manages to contain the pandemic in the not-too-distant future and that it does not reappear in the fall, growth should turn positive again by the end of this year. In that case, we would be in store for a pretty quick snap back in activity.”