• Consumer Confidence Drops

    Consumer Confidence Drops, Air Travel Recovery Slows, Gold Prices Rise to Record

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    Rising coronavirus cases shook consumer confidence in July, according to a closely watched index. (Getty Images)
    Rising coronavirus cases shook consumer confidence in July, according to a closely watched index. (Getty Images)

    Consumer Confidence Drops

    Consumer confidence slipped in July after a big jump in June when cities and states were reopening retail shops and restaurants.

    The Conference Board’s closely watched index fell 5.7 points to 92.6 this month. In June, the research firm's index shot up from 85.9 to 98.3, far exceeding expectations.

    Consumers showed greater pessimism in Michigan, Florida, Texas and California, according to the monthly survey.

    Florida, Texas and California have had record daily increases in new confirmed coronavirus cases. Other states saw similar increases and local governments have stalled reopening or reversed course with the hope of quelling the resurgent coronavirus spread.

    “Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement. “Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending.”

    International Air Travel Recovery Slows

    Global passenger traffic isn’t expected to turn to pre-coronavirus levels until 2024, one year later than previously predicted, in part because of the surge in confirmed coronavirus cases in the United States, according to an industry trade association.

    The International Air Transport Association had projected the recovery taking place in 2023. While developed countries other than the United States have successfully contained the virus, “there is little sign of virus containment in many important emerging economies, which in combination with the U.S., represent about 40% of global air travel markets,” the association noted.

    June passenger traffic fell 86.5% compared to a year earlier. That is a slight improvement from a 91% drop in May. Load factor, the number of passengers a plane carries, dropped to a record low in June at 57.6%.

    Other reasons the association altered its recovery forecast include reduced corporate travel and weak consumer confidence. The association said it expects corporate travel to remain constrained as companies face financial pressure given the state of domestic economies in addition to the global economy.

    Leisure travel has been a bright spot for the travel industry, but the association said that “consumer confidence is weak in the face of concerns over job security and rising unemployment.”

    Gold Prices Rise to Record

    Gold hit a record high price as investors look for safety during the coronavirus pandemic and while relations grow more tense between the United States and China.

    The price rose as high as $1,974.70 per troy ounce during trading Monday, topping the previous record in 2011 of $1,923. Market analysts predict gold prices hitting $2,000 by September.

    Gold’s price gained about $400 an ounce since the beginning of the year. The price rose sharply since mid-July, with an increase of roughly $133.

    The World Gold Council said investors put $40 billion into gold-backed exchange traded funds through the first half of the year.

    Lindsey Bell, chief investment strategist for Ally Invest, told NPR that gold is a safe haven for investors looking for a hedge against a falling dollar, instability in the financial markets and rising inflation brought by increasing levels of government debt.

    The U.S. government’s efforts to ease the financial turmoil caused by the coronavirus pandemic have cost about $3 trillion so far. Another $1 trillion is potentially coming as Republicans and Democrats hash out legislation that may include additional direct payments to people as well as other federal spending measures.