New coronavirus stimulus checks may not trigger an economic jolt: poll
A fresh round of stimulus from a bickering U.S. government may do nothing more than plug a hole in the worsening finances of COVID-19 impacted households. In other words, those on the Street expecting a jolt to economic growth from rampant frivolous consumer spending could be quite misguided.
More Americans would put new stimulus checks toward improving their personal balance sheet than spending willy nilly at Best Buy, Walmart, Target and various malls, suggests findings in a new Yahoo Finance-Harris Poll survey. About 53% of people surveyed would take the money and pay down bills, 43% said they would use it for necessities, 39% are inclined to rebuild personal savings and another 30% are keen on using the funds for their rent/mortgages. Only 22% polled said they would spend new stimulus checks on holiday gifts.
“I think there is a huge demarcation here we have to draw between what’s going on in the near-term [with the economy] — which we think is not going to be pretty — versus what things will look like getting further into next year,” warned Morgan Stanley Chief U.S. economist Ellen Zentner on Yahoo Finance Live.
Indications of renewed U.S. economic weakness is starting to appear as states enact new mobility restrictions in an effort to gain some form of control back over the virus. Not helping matters is the lack of stimulus, a situation that has been in play for months now amid the election.
U.S. consumer confidence tanked to 96.1 in November from 101.4 in October, according to the Conference Board on Tuesday. It marked the lowest headline reading since August (when stimulus was still around). The report highlighted sizable drops in consumer expectations for income, business and job market conditions.
The Conference Board’s read on consumers comes after an equally dismal reading from the University of Michigan. Consumer sentiment for the two weeks ended November 10 fell to 77 from 81.8 in October, also because a noticeable drop on expectations.
Meanwhile, U.S. retail sales in October rose at their slowest rate since the spring, according to new data out of the Commerce Department last week. Retail sales rose a seasonally adjusted 0.3% in October, far slower than the 1.6% gain in September. Retailers such as Macy’s and Kohl’s reported very weak third quarters this week, too.
The Yahoo Finance-Harris Poll found a cautious consumer ahead of this week’s key Black Friday period.
Nearly half of Americans polled said they are cutting back on holiday spending versus last year. Roughly 36% said they would spend about the same on gifts year-over-year. But, one-in-10 Americans conceded they will not spend money on holiday gifts for others at all this year.
Added Zentner, who is bullish on economic growth in 2021, “We have got to get past a really big hurdle here. The winter of discontent, if you will. It’s not looking very good.”
And sadly, even new stimulus checks wouldn’t be enough to stop the said discontent.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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