COVID-19 Pandemic: A Study On American Spending Habits

With home buying seeing all-time highs while travel is at a standstill, there is no question COVID-19 has had a drastic impact on our behaviors and routines. But more importantly, this year’s pandemic is redefining our true wants vs. needs. This new wave of pandemic spending habits is starting to uncover the dramatic ways Americans are dealing with the crisis and the impact it’s having on our wallets.

While we may all still be daydreaming of when we’ll be able to put our “vacation funds” to good use, how has our pandemic spending habits changed in the past few months and which businesses are seeing a boost in sales as a result?

The Personal Capital team saw spikes and trends from transaction activity on the Dashboard during the months of March through the end of July around top categories and merchants both pre and post COVID-19. Taking a look at what categories were at the top before March 2020 and comparing it to the top categories at the end of July (in the middle of the pandemic) you can see in the illustration below some of the dramatic shifts.

 

As you’ll see in the illustration above, the top discretionary spending categories from last year up until Feb 2020 were as follows (in order from 1-5): Travel, Other Expenses, Restaurants, General Merchandise and Groceries. Looking at the results – it’s clear that before the pandemic, Americans loved to travel and spent a large share of their money doing so. It’s important to note that the category “Travel” as a whole is defined as everything from airline, taxis/car-sharing (Uber and Lyft), hotel accommodations and more.

When you look at Travel as a category from March through the end of July 2020, you can see that the category saw a dramatic drop, moving to the #6 category in total discretionary spending (for obvious reasons as the shelter in place mandates resulted in many of us not being able to travel).

So what did American consumers replace as the top category during the pandemic? It’s clear that general merchandise and groceries jumped to the top spots (1 and 2 respectively) as many Americans are now spending more time at home and stocking up on supplies (aka the great toilet paper shortage of 2020). “It’s natural to want to feel prepared during a crisis and the COVID-19 pandemic definitely fueled this so-called “panic buying” craze during the early months of the pandemic,” said Kyle Ryan, Executive Vice President of Advisory Services.

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