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Why is consumer confidence on the rise?

June's increase in the Consumer Confidence Index increased more than experts expected.

ATLANTA — ATLANTA – Despite a nationwide increase in the number of COVID-19 cases, consumer confidence is up.

The nation’s Consumer Confidence Index rose to 98.1 in the month of June after a May reading of 85.9. Economic experts expected an increase as areas of the country loosened shelter-in-place orders, but the jump was more than anticipated.

The country is still locked in an economic crisis as COVID-19 cases have surged in recent weeks. Some areas have reimplemented restrictions on businesses.

The monthly index is based on a survey of 5,000 households who are quizzed about their view of the country’s current economic health and where they see it six months in the future.

“Economic momentum is driven by how people are feeling, how they’re perceiving situations,” says Emory economics professor Tom Smith.

While the Confidence Index is still well below what it was before the pandemic, June’s number is significantly higher than it was in May.

The survey ended June 18th just as Georgia and other states were experiencing a sharp rise in new COVID-19 cases.

Smith says consumers are likely clinging to the bright spots. The stock market, for example, reacted positively to the most recent, upbeat jobs report. Amazon and Netflix are among the companies that have experienced record highs on the market despite dour news about the pandemic.

“We get a little shard of good news and people extrapolate that into everything else,” says Smith. “I think people are looking for anything that can bring them some hope.”

Smith says the rise in the Consumer Confidence Index could have long term impacts.

“If people see these numbers and say, ‘my fellow consumers have confidence, I’m going to have the same kind of confidence,’ that’s the kind of economic traction we need,” says Smith.

Despite the show of confidence, economic experts say it’s too early to say consumers are ready to start spending like they were before the pandemic.

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