The likelihood of people going out and spending at establishments is closely tied to how well the virus is contained, economists say, meaning that simply easing pandemic restrictions may not be enough to revive commerce.
Consumer confidence is starting to rise from low levels, according to the latest data from Gallup, and people are starting to go out to establishments in small numbers. If, however, infection rates from the virus go up, “people will be more hesitant to go out and spend,” said Marta Lachowska, a labor economist at the Upjohn Institute for Employment Research who specializes in research on employment and expenditure.
“In the short run, it’s looking good, but in the medium run, things could change drastically,” Lachowska said.
Public health experts, including top government infectious disease expert Dr. Anthony Fauci, have cautioned against reopening states too quickly and risking another coronavirus outbreak.
Due to the fear of a potential coronavirus spike after states reopen, consumers “have adopted a wait-and-see approach with the virus and thus with spending,” said John Leer, an economist for Morning Consult, a global data intelligence company.
Leer added that three conditions are necessary for consumer confidence to return: People have to be comfortable from a health perspective, stores must actually be open, and consumers have to have money to spend — along with some level of job security. He said that the current high levels of job instability could be a drag on spending.
Gallup principal economist Jonathan Rothwell said that although there was not an expectation for a massive spike in coronavirus cases, large events still won’t happen, and states will be opening up their economies slowly.
“The good news is that the trends in most states are going in the right direction in that there are fewer cases and deaths, so activity could pick up soon, but I expect the reopening of businesses and resuming of consumer activities to be cautious and gradual,” Rothwell said.
In early May, just 22% of adults said they would feel comfortable dining out at a restaurant in the next month, up from 9% in April, according to consumer polling by Morning Consult. Furthermore, the number of people who said they feel comfortable going to a shopping mall in the coming weeks rose from 7% in April to 18% in May. The numbers show how restaurants and retail stores have been catastrophically affected and how long their road to recovery is.
President Trump’s outside economic adviser, Stephen Moore, expressed caution regarding consumer behavior. “It’s one thing to open up the economy,” said Moore, who is also a Washington Examiner contributor. “It’s another thing to get people back into stores and back into restaurants and back in public places, and so that’s going to be a very slow process.”
Moore predicted it would be a “brutal, brutal summer” for retailers and restaurants in particular, and there would be a lot of business failures because of how long it might take consumers to return to normal spending habits.
“Right now, it seems like people are still afraid to go out, but those numbers drop every day,” Moore said. “So that number is declining, but still, you know half of the people still don’t even want to go outside.”
Rothwell said that health risk factors and age might play a role in determining the likelihood that someone would go out and start spending. He added, though, that contrary to what one might expect, older people who are more vulnerable to the virus, those between 50 and 64 years old, don’t appear to be any less likely to say that they are ready to go out and spend than younger people between 18 and 29 years old.
