Why Are Consumers Still So Gloomy? Blame Covid.
Many explanations have been given for why sentiment has failed to rebound to pre-pandemic levels despite the strong economy, but only one is plausible.
Why so gloomy?
Photographer: George Marks/Hulton Archive via Getty Images
Americans are downbeat about the economy, even as inflation rates rapidly decline back toward more normal levels, the unemployment rate has held below 4% for the longest stretch since the late 1960s and economists race to raise their growth forecasts. And yet, sentiment has been at levels typically seen in recessions since the start of the pandemic.1
Lots of reasons have been given for the gloominess, including political partisanship, the media’s focus on negative news stories and bad “vibes” in general. There’s another, less talked about but more likely explanation for the disconnect: Covid-19 itself. The timing is clear, sentiment plunged at the start of the pandemic but failed to rebound when the economy re-opened and snapped back. In terms of sentiment, the pandemic caused a sudden increase in pessimism that hasn’t gone away.