Prosper Insights and Analytics | US Consumer Are Getting Used to "New Normal"

(Updated: 18 Jan 2021; Originally published: 15 June 2020) January 2021 consumer survey data from Prosper Insight and Analytics demonstrates that US consumers are getting used to their new lifestyles and have shifted from wishing for the pandemic to go away to just dealing with the “new normal”. 

• Consumer Spending. US consumer confidence took a big hit in January as consumers looked ahead to the next few months. The US economy is sending so many mixed signals right now that you might be better off consulting a psychic rather than using traditional measures to get a handle on its trajectory. Consumer confidence dropped -12.6 percent (500 bps) from December 2020 to January 2021.
• Consumer Confidence. Unlike consumer confidence, consumer mood (aka consumer sentiment), increased 0.6 percent (60 bps) in January. Prosper’s Consumer Mood Index is a composite measure of 10 factors including how people feel about family, finances, health, relationships and more to gauge sentiment.
• Consumer Sentiment. In another sign of consumer schizophrenia, Prosper’s Consumer Spending forecast shows a slight downward trend coming out of the holiday season, decreasing -2.3 percent (-186 bps). As we are learning, consumers are finding some different categories to spend their money on. Consumer softlines are trending down while hardlines like home remodeling and related categories are doing much better.  Just hang on for a potential case of “consumer spending whiplash” as President Elect Biden announced an additional one-time payment to supplement the $600 that was sent out previously with an extra $1,400 per adult family member and more for households with children. Some economists are afraid this amount of economic stimulus may provide a big jolt, changing the current trajectory of the economy a bit too quickly.