US consumers' confidence and responses to COVID-19 shock

Citation:
Massah, S. E., S. Bacheer, and E. Hassanein, "US consumers' confidence and responses to COVID-19 shock", Review of Economics and Political Science, vol. ahead-of-print, issue ahead-of-print: Emerald Publishing Limited, 2022/01/01.

Abstract:

Purpose This research's main objective is to investigate the relationship between consumption expenditure and consumer confidence in the USA and to study their effects on US economic revivalism during and after the coronavirus disease 2019 (COVID-19) shock. Design/methodology/approach The authors use Michigan's monthly Consumer Sentiment Index and its five components from January 1978 to April 2020. The study is unique in quantifying the potential variations in US consumer confidence due to COVID-19 under different scenarios, by providing a projection until December 2021. It also estimates the time needed for recovery and offers guidance to policymakers on ways to contain the negative impacts of COVID-19 on the economy by restoring consumer confidence. Findings All scenarios show a gradual recovery of consumer confidence and consumption expenditure. This study recommends expansionary policies to encourage consumption expenditure to generate additional demand and boost economic growth and job creation. Practical implications Though this study is limited to the US consumer confidence index, it offers significant implications for marketers, customers and policymakers of other developed economies. The authors recommend expansionary economic policies to boost consumer confidence, raise economic growth and result in job creation. Originality/value The study is unique in quantifying the potential variations in US consumer confidence due to COVID-19 under different scenarios; by providing a projection until December 2021. It also estimates the time needed for recovery and guidance for policymakers on ways to contain the COVID-19 shock negative impacts on the economy by restoring consumer confidence.

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