Consumer confidence trends in Europe and the United States have been diverging for the first time since the coronavirus pandemic began in March.
This divergence in customer confidence largely follows the other trajectories of coronavirus spread, with the United States and Spain presenting the biggest drops in confidence in July and the largest increases in the average number of new cases consistent with the day-consistent capita.
From a political point of view, this transnational comparison reiterates the economic desire to involve the spread of the virus: sustainable economic expansion is only imaginable when the virus is under control.
This research is written through Morning Consult economist John Leer.
Consumer confidence trends in Europe and the United States are diverging for the first time since the first days of the coronavirus pandemic in March, indicating that consumers in 4 of Europe’s largest economies have returned to their pre-pandemic technique for assessing the economic situation. relevance of the news, while American and Spanish consumers remain obsessed with the spread of the virus.
Differences in confidence since mid-June are in stark contrast to the March-June era when consumers reacted in Europe and the United States. These recent discrepancies reflect differences in the underlying state of coronavirus in these countries, as well as in the structural characteristics of these economies and in their economic policies.
The most important thing that explains the variation in customer confidence between countries reverses the coronavirus pandemic. The dangers posed by the coronavirus pandemic to customers and their finances vary from country to country. Consistent with the capita, cases in the United States are particularly compatible with those of all other European countries. Among the European countries included in this analysis, Spain has noticed the increased accumulation in new capital-consistent bodies.
Table 1 confirms the instinct that the coronavirus is holding back customer trust. There is still a strong negative correlation between the number of new instances, consistent with customer and person trust.
To gain the benefits of daily data, it is also possible to evaluate the stability of the data between customer trust and coronavirus over time. The following graphs illustrate the 30-day correlations between customer trust and the number of new cases.
In general, correlations can range from 1 to minus 1, with values close to 0 indicating low correlation and values close to minus 1 indicating a negative correlation. Evolutionary correlations highlight how the dating between customer trust and the number of new instances evolves over time.
Correlations have a tendency to remain below zero, which is consistent with directory mappings of tables passed throughout the period. When the number of instances in a given country increases, client trust tends to decrease, resulting in a negative correlation. The United States and Spain are the only two countries where correlations remain strongly negative, indicating that customer feedback on the economies of those countries continues to monitor the evolution of the virus strongly.
However, when the number of new instances is minimized or stabilized, the data between the client trust and the coronavirus is close to zero. In other words, a minimization in the number of new instances is related to increased confidence. This asymmetrical dating is evident in all countries.
Currently, consumers in Germany, the UK, France and Italy appear to be paying little attention to coronavirus. The number of instances increases or minimizes trust. This is just a fear for consumers in those countries right now.
Although the number of new daily instances consistent with the capita in Spain is much lower than in the United States, the evolution of customer trust in Spain correlates with the number of new instances as in the United States. A very likely explanation for the disproportionate effect of the virus on Spanish customers is Spain’s dependence on tourism, which increases its economic exposure to the consequences of the pandemic. Prior to the 2017 pandemic, 11.8% of Spain’s GDP came from tourism, compared to only 2.9% of the gross added price (VAB) in the United States. As a result, travel restrictions that restrict travel to Europe and the United States disproportionately have an effect on the Spanish economy relative to the U.S. economy.
Part of the explanation of the decline in trust in Spain may also be similar to the recent announcement throughout the United Kingdom that one of its citizens returns from Spain to quarantine for two weeks in the face of the recent accumulation of new instances. Spain. Spanish citizens would likely be more aware of the destructive effects of the virus on the economy as a result of the announcement.
Eu. spending boosts confidence in Italy and Germany
Spain is not exclusive in Europe in terms of dependence on the call to the outside of its borders. The Italian and German economies are heavily dependent on tourism and exports, respectively. However, unlike Spain, customer confidence in Italy and Germany is on the rise.
Confidence in Italy and Germany appears to have benefited from the recent 1.8 trillion euro ($2.1 trillion) spending agreement reached through the leaders of the European Union’s member states. The agreement provides a mechanism for richer countries, such as Germany, to move the budget to poorer countries such as Italy, which have been the highest affected by the pandemic. It may not be unexpected that customer confidence in Italy increases in the days following the 21 July agreement, as the Italian customer gains advantages directly from that agreement.
Most unexpectedly, customer confidence in Germany has also increased, but not as much as in Italy. This reaction from German customers indicates that they recognize the long-term importance of the agreement for the European and German economies. The ability of European countries to use budget transfers to address disparities in the impact of economic shocks in the European Union reduces the threat of some countries being left behind economically. From an economic point of view, this increases the relevance of the Monetary Union of the European Central Bank and reduces the threat of sovereign defaults. Both advances would gain advantages for German customers.
The decline in confidence in Spain is even more significant when considered in the context of increased confidence across the continent. Like Italy, Spain will probably gain advantages by receiving transfers from other richer countries. Somewhat perversely, the recent increase in cases in Spain increases the likelihood that Spanish consumers will gain advantages from the EU agreement. Spanish consumers do not appear to be affected by this logic. While the agreement would possibly bring benefits to Spanish consumers in the long term, they remain focused on the immediate economic effects of the pandemic.
Europe’s Outlook Is Improving
Given the evolution of coronavirus, economic policy and customer confidence, the economic outlook for German, French and Italian customers has advanced over the following month. A previous comparison of the US and European economies assumed similar trajectories of the virus on both continents. In this case, job maintenance programmes in Europe were likely to be implemented in the short term, but in the end unemployment increased and business investment decreased, as the price burden passed from governments to businesses.
Speculation that the virus’s trajectory is similar in the United States and Europe has proved incorrect. At this stage, it turns out that demand in Europe will recover before a higher percentage of the prices of task maintenance programmes are transferred from governments to European companies. By aggressively restricting the spread of the virus and keeping staff attached to their cadres despite transitional holidays or closures, consumers in Germany, France and Italy are better placed to resume spending than those of the United States and Spain.
On the other hand, the economies of the United States and Spain remain indebted to the continued spread of coronavirus. Confidence in either country probably contracted in July, putting downward pressure on customer spending. These differences between countries in real time are applicable to companies, as they expect demand for their goods and for the rest of the year.
Lesson for Policymakers: The Value of the Fiscal Stimulus Label Overestimates Actual Costs
From a political point of view, these effects send a rather transparent message that containing the spread of the coronavirus is a mandatory condition to rekindle customers’ confidence and spending. The U.S. Congress It is debating lately the amount of money that will be provided to the unemployed and U.S. households, however, while direct monetary assistance is significant, sustainable expansion in U.S. customer spending demands to contain the spread of the virus.
An imaginable threat to eliminating the charge of accumulating weekly unemployment benefits is that it would possibly cause high-threat industry personnel to search for and download paints on task sites that increase the spread of the virus. Therefore, any assessment of the charges of these systems will have to subtract the prospective loss of GDP due to an accumulation in the spread of the virus, a decrease in customer confidence and a minimisation in customer spending and business investment. The actual cost of financing the additional benefits of unemployment insurance is almost in fact less than the value of the label, and the comparison between the United States and Europe provides a transparent picture of this counter-frequency.
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