Consumer Spending During a COVID-19 Lockdown
Shelter-in-place orders, lockdowns, and shutdowns in response to the coronavirus (COVID-19) are wreaking havoc on workers and businesses across the United States and the world. If the experience of other countries is any indication, we are in the early days of our attempt to stop the spread of the virus and the lockdown orders may continue for some time.
Impact DataSource developed this website to help visualize changes in consumer spending patterns that are occurring right now. We use the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey data to serve as the baseline spending and make projections about spending that may shift, be put on hold, or stop entirely. You can review the spending categories and adjust what you think the overall reaction will be across consumers and see the effect to spending in your metro area.
- Why Focus on Consumer Spending
- How Does Consumer Spending Change During a Lockdown?
- How Does the App Work?
- About the Data?
- Detailed Notes on Expenditure Categories and Adjustments
Why Focus on Consumer Spending?
Evaluating consumer spending is only one of the many interrelated issues facing our economy right now. At the exact time lockdowns are causing consumers to change spending patterns, many workers are losing income through reduced hours or layoffs. This loss in worker income and the reduction in business-to-business spending will also have a very real impact on the economy. We choose to focus on consumer spending because we are all consumers which enables us to more easily illustrate part of what is going on in the economy. In addition, concentrating on consumer spending in this crisis can be helpful for local economic developers and other government officials to comprehend the issues we face.
How Does Consumer Spending Change During a Lockdown?
The short answer is no one knows.
In the United States, restrictions are being imposed inconsistently at the state and local level. Therefore, it is important to acknowledge that every community and consumer will be affected differently.
The NY Times and Wired are keeping updated maps about which states and localities have instituted some sort of stay-at-home or lockdown measure.
How Does the App Work?
We start with a normal spending profile, adjust the spending for a month in a lockdown. Then we project the annual spending for 2020 based on how many months the lockdown lasts and how many months it takes to return to normal spending if every household in the metro followed that exact spending profile.
Here’s more detail on how to use the app and how it works.
Select a Normal Spending Profile
Users can choose a baseline or “normal” spending profile for household expenditures. The choices include a national average as well as spending profiles based on household size. Users are then able to indicate, in percentage terms, how spending will change due to a COVID-19 lockdown on a monthly basis by category.
As a starting point, our app incorporates our best guess at how spending will be affected during a lockdown. You can see our notes about each spending category and get more detail on what each spending category includes below.
We graph the monthly “normal” spending and “during lockdown” spending by category.
Choose a Metro and Project the Lockdown Duration/Recovery
Users can select a metro area and indicate how long a lockdown might last as well as how long it will take to return to ‘normal’ spending. We estimate the aggregate change in consumer spending in the metro area if all households in the metro area were identical to the subject household. The aggregate change in consumer spending is projected for the year 2020.
To estimate the 2020 annual spending change, we calculate the difference between normal spending and the monthly spending dictated by the user inputs. We simplify the calculations by assuming the following:
- January – Normal Spending
- February – Normal Spending
- March – Two weeks Normal + Two Weeks Lockdown Spending
- April – Lockdown Spending
- May to December – Dependent on your selections
In reality, it’s possible consumer spending will shoot back up in the months following the lockdown – consumers end up ‘catching up’ for lost spending – but we don’t account for this. In many of the expenditure categories the spending will truly be lost – you won’t go out and get three months’ worth of haircuts after a lockdown.
Because we are assuming every household is identical to the selected subject household, the aggregate spending and loss in spending can vary pretty drastically. The most realistic results will be generated using the National Average, Two Person Household, and Three Person Household profiles.
About the Data
In order to create our COVID-19 Consumer Spending app, we relied on consumer expenditure data from the Bureau of Labor Statistics’ Consumer Expenditure Survey to serve as the baseline or normal spending profile. Specifically, we use Table 1400. Size of Consumer Unit Annual Expenditure from 2018 which was released in 2019 (the most recent period available). For more information on this data source click here.
For our purposes, it made sense to analyze spending on a monthly basis. We obtained monthly estimates by dividing the annual expenditures by 12. Realistically, spending in these categories may occur unevenly over twelve months.
Average Spending Looks Weird
As noted by the BLS: The data shown in the published tables are averages for all consumer units, or for all the consumer units in a particular demographic group. For example, the expenditures, income, and characteristics for the group with a reference person as a one-person consumer unit are averaged across all consumer units with that characteristic. Because not all consumer units purchase each item during the survey period, the average expenditure for an item is generally considerably lower than the expenditure by those consumer units that purchased that item. The less frequently an item is purchased, the greater the difference between the average for all consumer units and the average for those purchasing the item.
Detailed Notes on Expenditure Categories and Adjustments
In the sections below, we provide additional detail each of the expenditure categories listed in the app as well as our thinking on how the spending might change during a COVID-19 lockdown.
Food Expenditures
Groceries – Lockdowns result in people eating more meals at home and therefore purchasing more groceries.
Adjustment Guess: 150%
BLS Consumer Expenditure Category Definition:
Food at home refers to the total expenditures for food at grocery stores (or other food stores) and food prepared by the consumer unit on trips. It excludes the purchase of nonfood items.
Restaurants – Lockdowns are requiring restaurants to convert to take-out or delivery only. Although these expenditures aren’t going to zero, lockdowns are significantly reducing the amount spent at restaurants.
Adjustment Guess: 20%
BLS Consumer Expenditure Category Definition:
Food away from home includes all meals (breakfast and brunch, lunch, dinner and snacks and nonalcoholic beverages) including tips at fast food, take-out, delivery, concession stands, buffet and cafeteria, at full-service restaurants, and at vending machines and mobile vendors. Also included are board (including at school), meals as pay, special catered affairs, such as weddings, bar mitzvahs, and confirmations, school lunches, and meals away from home on trips.
Alcoholic Beverages – This category includes alcoholic beverage purchased at bars and restaurants as well as alcohol to be consumed at home. Lockdowns may cause some individuals to drink more at home than usual, however, lockdowns are likely having a negative effect on the overall sales of alcohol because bars and restaurants are closed.
Adjustment Guess: 40%
BLS Consumer Expenditure Category Definition:
Alcoholic beverages includes beer and ale, wine, whiskey, gin, vodka, rum, and other alcoholic beverages.
Housing Expenditures
Mortgage or Rent – Lockdowns by themselves will not necessarily mean a change in consumer behavior when it comes to paying mortgages or rent. There is likely a very real and significant negative effect on mortgage or rent payments as workers lose income as a result of the lockdowns.
Adjustment Guess: 95%
BLS Consumer Expenditure Category Definition:
Owned dwellings includes interest on mortgages, interest on home equity loans and lines of credit, property taxes and insurance, refinancing and prepayment charges, ground rent, expenses for property management and security, homeowners’ insurance, fire insurance and extended coverage, expenses for repairs and maintenance contracted out, and expenses of materials for owner-performed repairs and maintenance for dwellings used or maintained by the consumer unit. Mortgage principal repayments are payments of loans and are shown in Other financial information.
Rented dwellings includes rent paid for dwellings, rent received as pay, parking fees, maintenance, and other expenses.
Utilities – Lockdowns may result in a slight increase in the use of utilities because people are spending more time at home.
Adjustment Guess: 120%
BLS Consumer Expenditure Category Definition:
Utilities, fuels, and public services includes natural gas; electricity; fuel oil and other fuels, such as wood, kerosene, coal, and bottled gas; water and other public services, such as garbage and trash collection, sewerage maintenance, septic tank cleaning; and telephone charges.
Hotels & Other Housing – We break out this category specifically to capture the reduction in hotel spending. Even before states began lockdowns, many businesses and consumers began to curtail travel. This category is expected to see a reduction in spending.
Adjustment Guess: 0%
BLS Consumer Expenditure Category Definition:
Other lodging includes all expenses for vacation homes, school, college, hotels, motels, and other lodging while out of town.
Daycare –Personal services include babysitting, daycare, nursery school and preschool tuition. Lockdowns are closing schools as well as daycare facilities. Presumably, many consumers are still paying for these services despite a temporary closure. Some may need to hire additional daycare services to work from home or get help from relatives. Overall, we’ve assumed no change in daycare.
Adjustment Guess: 100%
BLS Consumer Expenditure Category Definition:
Personal services includes baby-sitting; day care, nursery school, and preschool tuition; care of the elderly, invalids and handicapped; adult day care; and domestic and other duties.
Other Household Expenses – Lockdowns most likely won’t have a significant impact on this spending unless all non-essential businesses are prohibited.
Adjustment Guess: 100%
BLS Consumer Expenditure Category Definition:
Other household expenses includes housekeeping services, gardening and lawn care services, coin-operated laundry and dry-cleaning (non-clothing), termite and pest control products and services, home security systems service fees, moving, storage, and freight expenses, repair of household appliances and other household equipment, repair of computer systems for home use, computer information services, reupholstering and furniture repair, rental and repair of lawn and gardening tools, and rental of other household equipment.
Housekeeping Supplies – Many people are being more diligent about cleaning so there may be a slight increase in cleaning supplies due to COVID-19.
Adjustment Guess: 110%
BLS Consumer Expenditure Category Definition:
Housekeeping supplies includes laundry and cleaning supplies, cleaning and toilet tissues, stationery supplies, postage, delivery services, miscellaneous household products, and lawn and garden supplies.
Household Furnishings & Equip – Lockdowns will likely result in consumers holding off on household furnishing and equipment purchases.
Adjustment Guess: 10%
BLS Consumer Expenditure Category Definition:
Household textiles includes bathroom, bedroom, kitchen and dining room, other linens, curtains and drapes, slipcovers and decorative pillows, and sewing materials.
Furniture includes living room; dining room; kitchen; bedroom; nursery; porch, lawn, and other outdoor furniture.
Floor coverings includes new and replacement wall-to-wall carpets, room-size rugs, and other non-permanent floor coverings.
Major appliances includes refrigerators and freezers, dishwashers and garbage disposals, stoves and ovens, vacuum cleaners, microwaves, air-conditioners, sewing machines, washing machines and dryers, and floor cleaning equipment.
Small appliances/miscellaneous housewares includes small electrical kitchen appliances, portable heating and cooling equipment, china and other dinnerware, flatware, glassware, silver and other serving pieces, nonelectric cookware, and plastic dinnerware (excludes personal care appliances).
Miscellaneous household equipment includes typewriters, luggage, lamps and light fixtures, window coverings, clocks, lawnmowers and gardening equipment, other hand and power tools, telephone answering devices, telephones and accessories, computers and computer hardware for home use, computer software and accessories for home use, calculators, business equipment for home use, floral arrangements and house plants, rental of furniture, closet and storage items, other household decorative items, infants’ equipment, outdoor equipment, smoke alarms, other household appliances, and other small miscellaneous furnishings.
Transportation Expenditures
Vehicle Purchases – Lockdowns will likely result in consumers holding off on purchasing vehicles.
Adjustment Guess: 10%
BLS Consumer Expenditure Category Definition:
Vehicle purchases (net outlay) includes the net outlay (purchase price minus trade-in value) on new and used domestic and imported cars and trucks and other vehicles, including motorcycles and private planes.
Gasoline – With many individuals working from home during lockdowns travel being reduced significantly, we expect a reduction in spending on fuel.
Adjustment Guess: 30%
BLS Consumer Expenditure Category Definition:
Gasoline and motor oil includes gasoline, diesel fuel, and motor oil.
Other Vehicle Expenses – This category includes two expenditures that will likely see no change and one that will likely see a reduction. Vehicle insurance and vehicle finance charges can be expected to remain constant however vehicle maintenance expenditures will likely decline.
Adjustment Guess: 80%
BLS Consumer Expenditure Category Definition:
Vehicle finance charges includes the dollar amount of interest paid for a loan contracted for the purchase of vehicles described above.
Maintenance and repairs includes tires, batteries, tubes, lubrication, filters, coolant, additives, brake and transmission fluids, oil change, brake work including adjustment, front-end alignment, wheel balancing, steering repair, shock absorber replacement, clutch and transmission repair, electrical system repair, exhaust system repair, body work and painting, motor repair, repair to cooling system, drive train repair, drive shaft and rear-end repair, tire repair, audio equipment, other maintenance and services, and auto repair policies.
Vehicle insurance includes the premium paid for insuring cars, trucks, and other vehicles.
Car Rentals – We break out this category specifically to capture the reduction in car rental spending. Even before states began lockdowns, many businesses and consumers began to curtail travel. This category is expected to see a reduction in spending.
Adjustment Guess: 0%
BLS Consumer Expenditure Category Definition:
Vehicle rental, leases, licenses, and other charges includes leased and rented cars, trucks, motorcycles, and aircraft; inspection fees; State and local registration; driver’s license fees; parking fees; towing charges; tolls; and automobile service clubs.
Public & Other Transportation – Public transportation will likely be reduced during a lockdown and “other transportation” includes air travel which has seen a significant reduction.
Adjustment Guess: 10%
BLS Consumer Expenditure Category Definition:
Public transportation includes fares for mass transit, buses, trains, airlines, taxis, school buses for which a fee is charged, and boats.
All Other Expenditure Categories
Apparel– Lockdowns will result in fewer clothing purchases.
Adjustment Guess: 20%
BLS Consumer Expenditure Category Definition:
Men’s and boys’ apparel includes coats and jackets, sweaters and vests, sportcoats and tailored jackets, trousers and slacks, shorts and short sets, sportswear, shirts, underwear, nightwear, hosiery, uniforms, and other accessories.
Women’s and girls’ apparel includes coats and jackets, furs, sportcoats and tailored jackets, sweaters and vests, blouses and shirts, dresses, jeans, culottes, slacks, shorts, sportswear, underwear, nightwear, uniforms, hosiery, and other accessories.
Apparel for children under age 2 includes coats, jackets, and snowsuits; underwear; diapers; dresses; crawlers and other sleeping garments; hosiery; footwear; and accessories.
Footwear includes articles such as shoes, slippers, boots, and other similar items. It excludes footwear for children under age 2 and special footwear used for sports such as bowling or golf shoes.
Other apparel products and services includes material for making clothes, shoe repair, alterations and repairs, sewing patterns and notions, clothing rental, clothing storage, dry cleaning and sent-out laundry, watches, jewelry, and repairs to watches and jewelry.
Health Care – A COVID-19 lockdown may result in an increase in health care spending by a typical consumer.
Adjustment Guess: 120%
BLS Consumer Expenditure Category Definition:
Health insurance includes traditional fee-for-service health plans, preferred-provider health plans, health maintenance organizations (HMO’s), commercial Medicare supplements, and other health insurance.
Medical services includes hospital room and services, physicians’ services, service by a professional other than a physician, eye and dental care, lab tests and X-rays, medical care in a retirement community, care in convalescent or nursing home, and other medical care service.
Drugs includes nonprescription drugs and vitamins and prescription drugs.
Medical supplies includes topicals and dressings, antiseptics, bandages, cotton, first aid kits, contraceptives, syringes, ice bags, thermometers, sun lamps, vaporizers, heating pads, medical appliances (such as braces, canes, crutches, walkers, eyeglasses, and hearing aids), and rental and repair of medical equipment.
Entertainment – Consumers may shift some of their spending within this category but overall, we expect a reduction in entertainment spending because many entertainment options (such as sporting events) are prohibited during a lockdown.
Adjustment Guess: 20%
BLS Consumer Expenditure Category Definition:
Fees and admissions includes fees for participant sports; admissions to sporting events, movies, concerts, and plays; health, swimming, tennis and country club memberships; fees for other social, recreational, and fraternal organizations; recreational lessons or instruction; rental of movies, and recreation expenses on trips.
Television, radio, and sound equipment includes television sets, video recorders, video cassettes, tapes, discs, disc players, video game hardware, video game cartridges, cable TV, radios, phonographs, tape recorders and players, sound components, records, compact discs, and tapes (including records, compact discs, and tapes purchased through mail order clubs), musical instruments, and rental and repair of TV and sound equipment.
Pets, toys, hobbies, and playground equipment includes pets, pet food, pet services, veterinary expenses, etc.; toys, games, hobbies, and tricycles; and playground equipment.
Other entertainment equipment and services includes indoor exercise equipment, athletic shoes, bicycles, trailers, purchase and rental of motorized campers and other recreational vehicles, camping equipment, hunting and fishing equipment, sports equipment (winter, water, and other), boats, boat motors and boat trailers, rental of boats, landing and docking fees, rental and repair of sports equipment, photographic equipment and supplies (film and film processing), photographer fees, repair and rental of photo equipment, fireworks, and pinball and electronic video games.
Personal Care Products & Services – It is likely that consumers will spend less on personal care products during a lockdown. Additionally, a lockdown will prevent many of the personal services from being provided.
Adjustment Guess: 30%
BLS Consumer Expenditure Category Definition:
Personal care products and services includes products for the hair, oral hygiene products, shaving needs, cosmetics and bath products, electric personal care appliances, other personal care products, and personal care services for males and females.
Cash Contributions – Cash contributions include alimony, child support, and care of students away from home – which aren’t expected to be different in lockdown situation. The category also includes cash contributions to religious, educational, charitable, or political organizations. An argument can be made for an increase as well as a decrease and so we have left this category unchanged.
Adjustment Guess: 100%
BLS Consumer Expenditure Category Definition:
Cash contributions includes cash contributed to persons or organizations outside the consumer unit, including alimony and child support payments; care of students away from home; and contributions to religious, educational, charitable, or political organizations.
Personal Insurance & Pensions – This category includes life insurance and other personal insurance as well as contributions to retirement, pensions and Social Security. We don’t expect a significant immediate change in this category in response to a lockdown.
Adjustment Guess: 100%
BLS Consumer Expenditure Category Definition:
Life, endowment, annuities, and other personal insurance includes premiums for whole life and term insurance; endowments; income and other life insurance; mortgage guarantee insurance; mortgage life insurance; premiums for personal liability, accident and disability, and other nonhealth insurance other than for homes and vehicles.
Retirement, pensions, and Social Security includes all Social Security contributions paid by employees; employee contributions to railroad retirement, government retirement, and private pension programs; and retirement programs for the self-employed.
Reading – Consumers may spend a little more on books during a lockdown.
Adjustment Guess: 105%
BLS Consumer Expenditure Category Definition:
Reading includes subscriptions for newspapers and magazines; books through book clubs; e-books and digital reading material; and the purchase of single-copy newspapers, magazines, newsletters, books, and encyclopedias and other reference books.
Education – Education spending is likely locked in so less sensitive to monthly spending changes.
Adjustment Guess: 100%
BLS Consumer Expenditure Category Definition:
Education includes tuition; fees; and textbooks, supplies, and equipment for public and private nursery schools, elementary and high schools, colleges and universities, and other schools.
Tobacco – Consumers may spend a little more on tobacco products during a lockdown due to more time at home and added stress.
Adjustment Guess: 110%
BLS Consumer Expenditure Category Definition:
Tobacco products and smoking supplies includes cigarettes, e-cigarettes, cigars, snuff, loose smoking tobacco, chewing tobacco, and smoking accessories (such as cigarette or cigar holders, pipes, flints, lighters, and pipe cleaners).
Miscellaneous – We assume this category is unchanged. Many of the miscellaneous spending categories will likely go down during a lockdown. However, funerals are included in this category which may see an increase during a COVID-19 lockdown.
Adjustment Guess: 100%
BLS Consumer Expenditure Category Definition:
Miscellaneous includes safety deposit box rental, checking account fees and other bank service charges, credit card memberships, legal fees, accounting fees, funerals, cemetery lots, union dues, occupational expenses, expenses for other properties, and finance charges other than those for mortgages and vehicles.
