Consumer sentiment sinks to a nearly 4-year low in March

Consumers rapidly lost confidence in the economy toward the end of March as the coronavirus pandemic spread and the U.S. resorted to unprecedented tactics to slow it down.

The final results for the consumer sentiment index fell 89.1 in March from a preliminary 95.9 and 101.0 in the prior month,according to the University of Michigan.

That’s the weakest reading in nearly four years and it’s likely to get a lot worse, perhaps dropping to levels last seen during the 2007-2009 Great Recession. Consumer confidence could fall even lower than that if the crisis drags on for months, economists say.

The survey’s final results included more responses from consumers in the latter part of the month as the coronavirus spread more rapidly and shuttered large parts of the economy.

What happened: The realization that the COVID-19 pandemic would bring the economy to a near halt only began to sink in during the last two weeks of March. With millions of Americans losing their jobs, the economy is sputtering badly. So are Americans’ expectation for the economy,
Big picture: The U.S. economy has already begun to contract and is likely to endure a deep recession. How long it lasts and how quickly growth recovers will depend on how fast the federal governments and states manage to contain the viral outbreak.

Even if they do, the damage is unlikely to dissipate quickly. Many industries will need time to recover, especially if American maintain “social distancing.” That could keep the unemployment rate elevated for some time. Economists predict the jobless rate will soon surge to 10% or higher from a 50-year low of 3.5% just last month.