Read our May 8th report, Pandemic's Impact on Economic Behavior

Confidence inched upward in early May as the CARES relief checks improved consumers' finances and widespread price discounting boosted their buying attitudes. Despite these gains, personal financial prospects for the year ahead continued to weaken, falling to the lowest level in almost six years, with declines especially sharp among upper income households. Improved views on buying conditions were due to discounted prices and low interest rates, although their impact was partially offset by uncertainties about job and income prospects. Perhaps the most surprising finding concerned consumers' inflation expectations. The median expected inflation rate during the year ahead rose sharply, with wide differences across age and income subgroups. As shown in the chart, the Expectations Index still indicates that no economic restoration is as yet anticipated by consumers.

Consumers were asked to identify their top concerns about the pandemic: was it the threat to their health, the required social isolation, or the impact on family finances? The health threat dominated in both months, cited by 61% in April and 57% in May. The original hypothesis was that as their primary concerns shifted from health to finances, consumers would become less accepting of constraints on reopening the economy. Those that cited damages to their finances as their top concern fell to 17% in May from 22% in the prior month. Surprisingly, it was greater concerns about social isolation that increased, cited as the top concern by 21% in May up from 14% in April. While these shifts were quite small, they indicate the growing costs of social isolation and its potential to shift opinions about reopening the economy.