Diverging geographic and demographic confidence emerges
While national confidence numbers have been strengthening—many approaching or even surpassing pre-pandemic levels—several stark differences in regional and demographic indices have emerged. In two census regions—New England and the Mid Atlantic—confidence levels are higher than they were in February, 2020. Pacific states are on par with pre-pandemic confidence levels, and the rest of the country remains well below pre-pandemic index levels. Index levels in the Mountain states—Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming—remain more than 30 points lower than they were in February of last year. The East South Central region, which includes Alabama, Kentucky, Mississippi and Tennessee, is not faring much better, with index levels still more than 25 points below last February. Many of the geographic areas mired in lower confidence numbers are seeing a resurgence in COVID-19 cases, which could continue to suppress the recovery in confidence.
Of all income groups, only households with an annual income of $75-$100k still remain well below pre-pandemic index levels—nearly 22 points below February 2020. All other income levels have surpassed or are approaching pre-pandemic levels. Anticipating potential hardships from the imminent expiration of many support programs, middle income consumers have grown less confident as a result. Income expectations have been on an upward trend, however, with more than 20 percent of consumers overall expecting higher income in the next six months. Job recovery and income growth may reverse the lower confidence levels among middle income consumers.
The trend in confidence has been positive for all age groups over the last six months, but consumers 55+ are the only group with a higher index level than pre-pandemic. After a precipitous drop in confidence in late 2020 and early this year, older consumers’ confidence has come back strong and surpassed that of other age groups in July. The rebound began as vaccinations were first distributed to older consumers, and it quickly showed in other components of the index, such as purchase intentions for autos and appliances, as well as travel. This increased confidence could drive spending trends among older consumers, warranting close observation in the coming months.