Consumers are closing their wallets again as coronavirus infections soar

Governors of states seeing coronavirus infections surge are piling restrictions back onto their citizens. But a raft of new data show its everyday Americans who have been leading the way in this area, once again deciding to self-isolate before official lockdown orders return.

Those precautionary moves are squelching the consumer spending the economy will need to sustain a bounce back from this spring's recession.

The evidence of sinking consumer spending paints a grim picture of an economy that looked to be rallying strongly just weeks ago now stalling out.

The development confirms anew the pandemic itself will steer the economy's course.

We've known since the pandemic began that consumers were drawing their own conclusions about the safety of public activities and behaving accordingly. So it stands to reason they would start closing their wallets again as infections surged nearly 50% last month, in what now looks like a case study in the consequences of state leaders reopening too quickly.

Those that relaxed restrictions earliest - including Florida, Arizona, and Texas - helped lead the country to 800,000 new cases in June. And the pandemic is still raging, with the U. S.breaching 50,000 cases on Wednesday alone, a new daily record.

Governors overseeing infection spikes in the last week are racing to revive controls on businesses and public gatherings and introducing news ones, including mask mandates. States home to more than half the population are now rolling back or pausing plans to reopen, according to Goldman Sachs.

Consumers again are ahead of the curve.

Morning Consult economist John Leer points to a "steady decrease" in consumer confidence starting on June 12, following more than two months of clawing back from its trough after the pandemic first hit. And that sentiment continues to deteriorate, he says.

"Consumers have changed their mind about how they're going to engage prior to any sort of public announcement being made," Leer says. "Regardless of when the lockdowns happen, they're following the news. It's sort of that simple."

A study by University of Chicago economists this month backs up that finding. Using cellphone data to track visits to more than two million businesses, Austan Goolsbee and Chad Syverson found consumer traffic fell more than 60% during the lockdown, but legal restrictions only explained 7% of that drop. "Individual choices were far more important and seem tied to fears of infection," they write.

Other real-time readings show the pullback accelerated in the second half of June.

"Data on small business openings and employment from Homebase, which provides scheduling and time tracking software for businesses, show that small business employment and openings worsened over the past week, after plateauing for much of June," The New York Times's Jim Tankersley and Ben Casselman reported. "The Homebase data showed a nearly 40% improvement for small business activity in May; across all of June, that fell to 6%."

Meanwhile, "foot traffic to retailers and other businesses declined in the third week of June in Houston, Orlando, Jacksonville, Phoenix and other large cities across the southern states where infections have spiked, according to an analysis of Safegraph.com data by researchers at the American Enterprise Institute in Washington."

And spending in restaurants and bars that had picked up in states that opened early started dropping last week, according to anonymized credit card data tracked by JPMorgan Chase, The Wall Street Journal's Greg Ip reported.

Americans' outlooks have also grown more pessimistic.

Navigators Research, a Democratic polling firm, finds nearly four in five people don't expect a "return to normal" until next year at least:

Neither, for one, does San Francisco Federal Reserve Bank President Mary Daly. Under her best-case scenario, the economy won't fully recover for four or five years. That, she told Heather Long in a PostLive interview Wednesday, would come about "if we can get the public health issues under control either through a really robust mitigation strategy or a vaccine ... But if we end up with a pervasive longlisting hit to the economy, then it could take longer."

Economists surveyed by The Wall Street Journal said they expect the economy added 2.9 million jobs in June, nudging the unemployment rate down to 12.4%, the paper's Sarah Chaney reports. That would "still leave the U.S. with about 17 million fewer jobs than in February, the month before the coronavirus pandemic struck the U.S. economy." And the jobs report set for release this morning, "based on survey data largely collected in mid-June, won't reflect these recent government-mandated business closures and related layoffs."