94.7% FORECAST ACCURACY || BUSINESS-MINDED ECONOMISTS || UNBIASED AND APOLITICAL
Lauren Saidel-Baker is an experienced speaker and economist. She graduated cum laude with honors in economics and a double major in religion from Wellesley College. Her experience in finance supports her commanding grasp of ITR Economics' programs and subscriptions and their practical applications.
Amidst the economic recession triggered by the COVID-19 pandemic, consumer spending has contracted. Yet the decline is not equal across the consumer space. Rather, certain spending categories are booming while others fall dramatically. So what are we buying, aside from facemasks and hand sanitizer?
To answer that question, I examined Personal Consumption Expenditures (PCE) data to determine which categories grew by the highest percentage, and which contracted by the highest percentage, year over year.
Several of the worst-performing categories were to be expected. Spending at movie theaters has plummeted in the wake of shutdowns and delayed film releases. Travel, especially foreign travel, has also come to a standstill with border closures. In-school lunch spending nearly ceased due to school closures. Spectator events have largely been canceled; those sporting events that still take place mainly do so without an audience.
Bottom PCE Categories:
|
Motion Picture Theaters |
-47.5% |
|
US Travel Outside the US |
-46.4% |
|
Foreign Travel in the US |
-45.2% |
|
Elementary and Secondary School Lunch |
-43.4% |
|
Passenger Fares for Foreign Travel |
-40.2% |
|
Admission to Specified Spectator Amusements |
-37.7% |
|
Package Tours |
-37.7% |
|
Railway Transportation |
-37.5% |
|
Photo Studios |
-37.3% |
|
Spectator Sports |
-36.9% |
But spending is not contracting across the board. Certain categories of personal consumption are rising at double-digit paces year-over-year. The top-performing segment, video media rental, is a fitting complement to the worst performer: former movie-goers are now enjoying films at home.
Unsurprisingly, emergency and relief services spending spiked in response to the extraordinary pandemic effects. What may be more surprising, however, is that spending in the newspaper category is rising at a pace last seen in 1980.
The consumer's desire to engage in safe and socially-distanced hobbies is evident in the five categories rounding out the top 10, including purchases of audio and sporting equipment, and even big-ticket items such as motorcycles, boats, and pleasure airplanes. Businesses that align with trends related to social distancing in both consumer consumption and B2B avenues will likely grow more in the near term.
Top PCE Categories:
|
Video Media Rental |
20.6% |
|
Miscellaneous Household Products |
18.9% |
|
Newspapers |
18.4% |
|
Community Food and Housing, Emergency, and Other Relief Services |
17.5% |
|
Other Delivery Service by Non-US Postal Facilities |
15.8% |
|
Audio Equipment |
15.0% |
|
Pleasure Boats |
13.7% |
|
Pleasure Aircraft |
13.7% |
|
Motorcycles |
13.7% |
|
Sporting Equipment, Supplies, Guns, and Ammunition |
13.1% |
Habits and spending patterns are changing. Now more than ever, it is critical to look to dispassionate data – not subjective media reports or assumptions – to determine your company’s path forward. If we at ITR can help in that process, please reach out!
Lauren Saidel-Baker
Economist
ITR Economics™ provides the best economic intelligence to reduce risk and drive practical and profitable business decisions.
