How The Pandemic Changed Consumer Spending Habits
It shouldn’t come to a surprise that U.S. consumers are cutting back on expenses and limiting purchases amid the pandemic. That said, the economy and certain small businesses have benefitted from increased spending in certain retail areas (thanks in part, to the federal stimulus checks). But we take a closer look at how COVID-19 has initiated a transformation of consumer spending trends that offers signs of further economic recovery.
Spending Habits: Pre & Post Pandemic
In 2019, nearly 70% of U.S. GDP was driven by personal consumption. It’s interesting to see how consumers’ habits have changed amid the pandemic and below we illustrate the high and lows. Below we see the expected drop in spending that began in late March and lasted until the early part of the summer.
Grocery and pharmaceuticals saw a huge spike in spending as many Americans (and the rest of the world) stockpiled non-perishable foods, sanitizer and toilet paper, and related items. Retail stores also increased orders and shipments of these items to meet growing demand. Big winners in this area were big box stores like Costco, Walmart, and other wholesale clubs.
As seen below, sales of office supplies grew as many people began working from home and homeschooling their children. We also see sales of apparel falling. However, as mentioned, stimulus checks have helped the apparel industry rebound with the help of stimulus checks. Overall, the economy has grown seeing a record number of new jobs created since mid-summer which is a positive sign.
The biggest surge of all was seen in food delivery. As consumers shifted their habits from eating out to eating at home, food delivery soared 5 times higher than any other sector. More people began cooking at home and those unable to leave their homes for essentials, relied on grocery delivery and curbside pick up.
Hope on the Horizon
Consumer spending offers a temperature of the economy’s health. The sharp drops and jumps in consumer spending fall in line with both economic health and consumer confidence – which has already been building. As we approach the 4th quarter and things settle further, an economic recovery, no matter how big or small it is indicates there’s alight at the end of the tunnel.