Consumer spending has shifted dramatically

Since the outbreak of the coronavirus, consumer spending has changed dramatically. Here are a couple of trends that have shifted over the past couple of weeks, according to Earnest Research, which tracks credit card and debit card purchases of nearly 6 million people in the US.

Travel has plummeted

As most of you already know, travel has been hit extremely hard. But it is probably worse than you even imagined. In fact, revenue for the week ending on April 1 was down 85% from the same time a year ago.

That is a huge drop and has affected virtually every sector in the travel space like airlines, hotels, cruises, and rental cars.

The online travel agencies like Expedia have also been hit very hard and blogs like this one that depend a lot on people researching travel have felt the wrath of the pandemic.

It’s truly been a bloodbath.

Groceries sales have spiked

For the week ending on March 18, grocery sales shot up 79% from the prior year.

This was due in large part to the frenzy around certain goods like toilet paper and also processed foods and canned goods that ran through all parts of the country. 

Things have leveled off for the grocery stores since then but are still up around 7%, with large increases in online grocery delivery services and meal prep companies.

I think there are competing forces for grocery spending where people are cooking more at home and buying more groceries but also trying to preserve food longer to avoid grocery store visits. So it’s no surprise to me that the frenzy of grocery spending has fizzled a bit.

Restaurants have tanked

Unlike prior economic downturn periods, in this one, restaurants have taken a huge hit.

With social distancing forcing many of these to shut down or only provide limited service, they have struggled mightily to survive. And the effect has been filled with all different types of dining establishments from fine dining down to fast food.

I’ve seen a number of restaurants resort to only take out and then eventually completely shut down for the time being so apparently running on just take out is not feasible for a lot of dining establishments.

Media and entertainment hit with mixed effects

Many types of entertainment like movie theaters, theme parks, and concert theaters have been completely shut down for the time being.

But we’ve seen a large surge in spending on video games and streaming services. Anecdotally, my social media feeds have been getting blasted with advertisements from various games so they are really exploding right now — usage is up by 75%.

Retail shopping has decreased

Retail shopping was already struggling mightily over the past decade as malls were dying but it has really felt the heat from the current crisis.

Revenue has taken a nosedive for stores like department stores, sneaker shops, and others in the retail space. Meanwhile, online shopping has absolutely soared.

In fact, “the number of online orders for web-only online retailers were up 52% year over year in the United States and Canada for the 2 weeks of March 22 through April 4.”

Transportation spending has dropped

Spending on mass transit and even rideshare services like Uber has gone down a great deal — Uber rides are down 70% in hard hit cities. And it’s affected everyone from subways to scooter sharing companies. Even those selling cars and auto parts have felt the strain.

Spending on health is down

Since gyms are closed, major fitness companies like 24 Hour Fitness and SoulCycle are feeling the hits, although spending for home fitness equipment has increased.

Since many hospitals have suspended elective procedures, there are fewer specialists working and some hospitals have even been forced to cut the pay or furlough doctors and nurses.

So it’s clear that the coronavirus has impacted a wide range of industries in a seriously negative way, but some have come out on top. Luckily, I don’t think that we will need a vaccine for some of these trends to start getting reversed but in my opinion the recovery will likely be gradual and will hit a certain ceiling until we have a proven vaccine in 2021. 


One comment

  1. I’m starting to think that everyone, myself included, that has gotten this message does not qualify for a stimulus payment. I suspect, the IRS can’t give me my payment status because I don’t have a payment coming. And no money has been direct deposited in my bank account because again I don’t qualify to get one. Sad, but pretty clear at this point.

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