There is no doubt that the global pandemic has ushered in massive changes to how we have all been spending our money. Especially for our neighbors who have lost their jobs or had their hours cut back, this health event has had a potentially devastating financial impact. For those of us fortunate enough to be working, how we spend our money has changed dramatically. First, some stats (all information from NYTimes / Earnest Research).
Some obvious starting points, most travel/leisure spending has dropped to virtually nothing. Airlines, lodging, cruises, rental cars, etc. have all experienced more than 75% declines in revenue. Ouch. On the flip side, spending on home improvements is up smartly. Instead of running around, people are home and getting to those long-neglected projects.
Transportation services such as taxis, mass transit, parking services, etc. are all way down and most surprising – scooter share services are off close to 100%. Lime and Bird might not survive this.
Oddly, the broad category of health-related spending is also down but when you break it down and realize that it includes fitness and gyms, beauty, personal care (I guess it is true, we just don’t look as good on Zoom!), it makes sense.
Restaurant sales are down, but grocery sales are way up. This includes supermarkets, warehouse clubs, meal kits, and especially online grocers. Some restaurants have pivoted to delivery, take-out/curbside processes but those sales continue to pale in comparison to pre-Covid levels.
The changes in media and entertainment are striking but not surprising. Theaters, events/attractions, music, sporting goods and book retailers are all suffering more than 50% declines in sales. On the flip side, streaming services (books, music and video) are all getting a nice new dose of revenue. To my surprise, the biggest winner of all was online gaming which as a category has seen a more than 50% increase in revenue.
Now the real question is, which of these changes are more permanent and which are temporary. Some of these categories will likely revert to “normal” quicker than others but in the long-run, I believe that old habits will reassert themselves. The more time goes by, the more folks will fall back into their pre-Covid patterns.
People are, in general, spending less due to being home more but also because they are feeling uncertain about the future. This means overall debt levels are coming down as people save more, payoff debts, etc. Ultimately a good thing and we saw a similar thing happen during the financial crisis. People paid down a lot of debt in the years around the financial crisis and have actually held pretty steady, not racking it back up again. I’m hoping a similar pattern will play out again with another aggregate and lasting decline in spending/debt. Perhaps we are all learning that we don’t need to spend as much to be happy.
The one category I hope comes back SOON is charitable giving. Naturally, on average, people are donating less because of the uncertainty and that is punching a big whole in our non-profits. As we all feel better about the future, I hope we’ll boost those contributions back up. A lot of our neighbors are going to need the help.
NOTE: More information about the data/research can be found here