The latest round of economic indicators shows forecasters were right when they predicted that the affluent would rebound far faster than others as the threat of Covid recedes. That means nonprofits that serve low-income Americans continue to see significant demand and that organizations that raise money from the affluent are likely to fare better than those that rely on small-dollar gifts.
One of the key indicators: A prominent survey of consumers released this month revealed a significant split in economic optimism between higher-income and lower-income households. What’s more, jobless rates continue to be a concern.
The following indicators, which experts say are important to nonprofits showed notable developments since our previous economic update.
Consumer Confidence
Up 3.1 percent from May
Driven by optimism from middle- and upper-income households, consumer confidence rebounded in June, up 3.1 percent to 85.5 out of a possible 100, according to the University of Michigan’s preliminary Consumer Sentiment Index results for the month.
But there’s a notable class divide in the results. According to Richard Curtin, the economist who leads the index’s survey of consumers, all of the consumer confidence gains in June can be attributed to households with annual incomes above $100,000.
Inflation worries continue to be the most prominent concern of American consumers, particularly among lower-income households.
Fundraisers may encounter more reluctance from low-income donors who have already begun to notice their reduced buying power. In this environment, Curtis said, it is unlikely that consumers will reduce their savings to pre-pandemic levels and will “maintain a higher level of precautionary funds.”
Regional Indicators
Rosy conditions abound, save for inflation
Fundraisers seeking money for local efforts can breathe a bit easier knowing that regional economies appear to be booming by most metrics. Federal Reserve Districts reported moderate to strong economic growth in regional economies across the United States, according to the latest edition of the Fed’s “Beige Book,” which tracks current economic conditions.
Notably, the San Francisco district reported “significant” expansion of economic activity in the region, with wages and inflation growing. To varying degrees, the picture was the same across other Reserve districts, each reporting rising wages alongside early concerns about the impact of inflation on consumers.
Stock Market
Markets show strong growth midyear amid a relatively slow June.
The Nasdaq Composite Index rose about 5 percent over the past 30 days. The Dow Jones Industrial average is down less than 1 percent, and the S&P 500 is up 1.8 percent in that same span.
But approaching the halfway point of the year, the picture looks less anemic. That’s good news for fundraisers because charitable giving tends to rise with the stock market. The S&P 500 is up more than 14 percent since the start of the year and the Dow Jones Industrial Average and the Nasdaq Composite Index are both up more than 12 percent.
Unemployment
Continues to hover around 6 percent
Driven by continued hiring gains in leisure, hospitality, education, social assistance — such as child care — and health care, unemployment ticked down slightly in May, dropping 0.3 percentage points to 5.8 percent, according to the Bureau of Labor Statistics. An estimated 9.3 million Americans remain unemployed and looking for work
Studies show that high unemployment rates put a damper on charitable giving.
The picture was a bit brighter for nonprofits in May, when an estimated 63,000 new jobs were added, driven by educational groups, which hired about 28,870 workers that month.
