US Consumer Confidence: Probably just the beginning of a bigger rebound – Wells Fargo

Data released on Tuesday showed an increase in consumer confidence indicators during February. With vaccines turning the tide on the pandemic and more fiscal relief on the way, analysts at Wells Fargo expect to see that this is just the beginning of a bigger rebound in consumer confidence.

Key Quotes: 

“As has been the case throughout this pandemic, the consumer mindset is largely influenced by the latest developments with the virus itself. Consumer confidence has only hit triple digits during two months of the post-pandemic era: September and October. That coincides with the period when new cases fell below 60,000, and we appeared to be making progress against the spread.”

“The 91.3 reading for February was a bit better than expected and marks the second consecutive increase in confidence, even if those gains are rather incremental.”

“We are confident that as the tide continues to turn with the fight against the virus, we will continue to see confidence rebound and would not be at all surprised to see a triple-digit reading again soon as warmer weather and the vaccine combine forces to return a degree of normalcy to consumer activity.”

“We are still a long way from a full rebound in the jobs market. While a full recovery for overall GDP will likely be realized as soon as the second quarter of this year, it will take years before overall payrolls return to their pre-pandemic peak…and longer still before we have something resembling a balanced fiscal budget.”