Stimulus Lifts Consumer Confidence, Americans Eager for a Return to Normalcy
More than 100 million stimulus checks have been delivered into the hands of everyday Americans in the last ten days, driving a noticeable uptick in consumer confidence, stock market gains, and heightened consumer demand and performance spikes for many of PMG’s retail clients.
With the American Rescue Plan signed into law less than two weeks ago, market research firms have noted that consumer confidence has risen more rapidly than it did following the two previous stimulus packages, revealing that widespread, concentrated efforts to contain the virus, such as advancing therapeutics, mass vaccination campaigns and drive-thru sites, along with extended unemployment benefits and a fresh round of stimulus, appear to be accelerating America’s economic recovery.
The chart pictured above visualizes how Morning Consult’s daily U.S. Index of Consumer Sentiment increased by 2.7 percent during the first five days after President Biden signed the American Rescue Plan bill into law, “compared to the 0.1 and 0.1 percent increases seen five days after the $2.2 trillion CARES Act and $900 billion COVID relief package in December were signed, respectively.”
It’s worth noting that millions of Americans experienced a more than three-week delay before receiving a stimulus check during the first round of federal relief, which likely impacted consumer confidence during that time. Fortunately, the process has since quickened, with many Americans reporting they received their stimulus payment just a day after President Biden signed the bill.
Because the income limit throughout the stimulus payments has decreased (from $100,000 to $80,000 for single filers), aiming to help the individuals most in need, consumer confidence among low- and middle-income demographics has reportedly risen significantly faster than high-income earners during the same period as a result.
In its latest report, Morning Consult analysts theorize that as long as new cases remain “relatively stable,” the latest relief bill should “support increases in U.S. consumer confidence over the next five months,” especially among low- and middle-income consumers whose job and financial security continue to be more “vulnerable to the economic consequences of the virus.”
The latest report from Adobe’s Digital Economy Index found that American shoppers have spent $183 billion online during the COVID-19 pandemic thus far, a staggering sum confirming that ecommerce adoption has accelerated since this time last year. In just the first two months of 2021, people have spent more than $120 billion online (34% YOY growth), a sum that will only rise in the coming weeks as consumer confidence grows and stimulus checks are put to use.
Interestingly, shoppers are leaning in to buy now, pay later (BNPL) payment options, with Adobe recording 215% YOY growth in this option as consumers continue to deal with financial uncertainty. In 2020 and into early 2021, digital baskets have been comprised of more staples and goods usually associated with the offline economy. These trends likely explain why online sales for home improvement products were up 60 percent YOY in January and February 2021, with apparel growing 22 percent during that same period.
Related: Williams-Sonoma recorded its best year of sales ever, with online sales growing 45 percent during its fiscal year.
Online grocery sales continue to grow as well, recording “a 230 percent increase during the first three weeks of February 2021 compared to January 2020,” according to Adobe. As states open back up to full capacity, Adobe analysts report they don’t expect buy online, pay in-store (BOPIS), or curbside pickup rates to backslide to pre-COVID normal any time soon.
Recent news stories and company announcements are sending strong signals that when viewed together indicate that a return to normal is nearing.
Here’s what we’re seeing:
Ninety-eight percent of AMC movie theaters in the U.S. are now open, with promising week-over-week growth in ticket sales.
Lyft reported that last week was its busiest since March 2020, the first time in a year that the company saw positive growth in ride volume.
Starting April 1, New York will permit residents to attend concerts at a limited capacity, sports fan capacity rules are also set to be relaxed.
Bloomberg reports that Apple is again letting users try on AirPods in stores while the ability to try on AirPods has been available in Apple Asia stores for months already.
Digital health passports are being lauded as the most promising way to restart global travel demand.
In a blog post, Google announced the company will be investing $7 billion in building new office spaces and data centers in 2021, signaling a return to the office for many and a strategic decision that will reportedly create more than 10,000 full-time jobs with Google across the U.S.
The CDC shortened social distancing guidelines for kids in school from six feet to three with masks.
Disneyland and its sister theme park California Adventure plan to reopen at limited capacity on April 30, after being closed for more than a year.
Looking ahead, the third round of federal relief is sure to serve as a tailwind for Americans eager to take advantage of warmer weather, whether it be by mapping out travel plans, investing in home improvement projects, or doubling down on self-care via retail therapy, as people look forward to a degree of normalcy by July 4, as communicated in President Biden’s first public address earlier this month.
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While it’s too soon to assess the full economic impact of the multiple rounds of stimulus, the leading indicators from consumer confidence to online shopping trends, savings rates and stock market gains continue to show positive trends, steering the American economy into recovery mode.
Posted by Abby Long
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