Politics and the Pandemic Stifle Consumer Outlook Heading Into 2021
U.S. consumers adjusted their expectations last year as COVID-19, social injustice, and contentious presidential and senatorial races sent the country into a tailspin. Given the unprecedented disruption, the findings of our sixth annual ThinkNow Pulse™ Report, a national survey examining consumer sentiment across key demographics in the U.S., are especially relevant as marketers scramble to get a pulse on the post-pandemic consumer.
Fielded in December 2020, Americans report worsened personal finances and a perception of a weakening economy, and the outlook for 2021 didn’t fare much better. Fewer Americans were feeling optimistic about improving their personal finances this year. Results were mixed, however, about the state of the U.S. economy. More Americans think that change is coming but are split on the outcome of the change. Compared with past years, more feel things will improve, but just as many believe it will get worse.
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Due to economic woes, all ethnic segments report a dip in household income.
Personal Finance
Only one-fourth (23%) of Americans report an improvement in household income in 2020, significantly less than a year ago, and the lowest proportion over the past five-year span. Consumers were more likely to report that income either stayed the same or worsened, particularly among Asian Americans.
Two in five Americans feel optimistic about their finances in 2021, but this represents a significant decline from last year. Of those less optimistic are Whites and African Americans. Asians, however, expect household finances to improve this year, compared to a year ago.
Unemployment
Compared to a year ago, significantly more Americans report job-related losses. This number is highest among Hispanics and African American workers, who are more likely to work in industries hit hardest by pandemic-related layoffs like leisure and hospitality, food service, and health care. Significantly more Non-Hispanic Whites reported a reduction in work hours.
Economic Outlook
While Joe Biden was declared the winner of the November presidential election, in December 2020, the U.S. was still embroiled in a fierce debate over the integrity of the election results. Yet, half of Americans surveyed felt the current political climate positively impacted their outlook for the upcoming year, stating they were “much, or somewhat more optimistic.” The other half were either less optimistic or felt the current political climate had no impact on their personal outlook.
Optimism is highest among Hispanics and African Americans and less so among Non-Hispanic Whites.
Given the challenges, Americans’ perception of how the economy is doing, overall, is split into two camps – those who believe the economy will improve and those who think it will worsen. We saw a decline in the percentage of those who have a positive outlook and an increase of those with a negative one. As a result, the net positive perception observed last year was lost.
Concerning the state of the economy, equal proportions of Americans feel the economy is growing or is in a recession/depression. Compared with past years, the 2020 shift in perception is significant on both ends of the spectrum.
Conclusion
The overarching theme of 2020 was one of great extremes, unprecedented health and economic crises, and extraordinary acts of kindness and humanity. That 50/50 split seemed to find its way into the insights gleaned from the responses of threadbare Americans who were running on fumes come year-end. While much has happened since December, it is clear, as demonstrated by the surge on the U.S. Capital on January 6th, there is a divide in America, but optimism is starting to take root.