CHICAGO, March 24 (Xinhua) -- The latest data from the University of Michigan's (UM) consumer sentiment surveys indicate that the coronavirus has reduced consumer optimism, and more importantly, it will continue to do so as the virus spreads in the weeks and months ahead.
Richard Curtin, director of UM's Surveys of Consumers, which conducts national monthly surveys of consumer attitudes, expectations and behavior, made the prediction in a news release posted on UM's website on Monday.
"An economic recession has already begun, and it is likely to reduce consumer spending for a period that is two to three times as long as the virus crisis," said Curtin. "What is needed is an aid package that provides multiple sources of cash transfers and debt forbearance."
The multiple sources would include an immediate cash transfer to all households, plus other cash transfers based on layoffs, healthcare costs, school lunch eligibility, as well as across many other aid programs.
Debt forbearance should involve loan refinancing at lower rates and no-cost extensions rather than simply delaying payments or providing additional loans that will act to impede the financial recovery of households. "These steps are especially important since consumers are likely to increase their saving balances and to decrease their use of credit in the aftermath of the virus," Curtin added.
With an economy that was expected to grow at about a 2-percent pace before the virus took hold, even small additional cutbacks in consumer spending could promote a lingering recession. The risks of doing too little are far higher than the risks of doing too much.
The panic atmosphere that has developed currently is quite unlike anything that today's consumers have ever experienced. It is now primarily based on fears about personal health rather than personal finances, said Curtin.
