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Record Fall for Consumer Spending With an Upside


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    In the month of April, consumer spending saw a record breaking fall of 13.6%, which hasn't been seen since 1959. However, personal income went up 10.5% due to the government's stimulus programs.

    With spending going down, and personal incomes going up, it should go without saying that Americans saw an increase in savings. In fact it was at an all-time high of 33% in the month of April, which is a significant climb from March's numbers which were 12.7%. Brick an mortar stores saw the biggest impact from the drop in consumer spending. JC Penny and Neiman Marcus were forced to file for bankruptcy protection. Online stores, however, saw a big boost in sales, unsurprisingly.

    Most, if not all of this increase in savings is due to the stimulus cash that the government has dispersed to the public. Say for instance if the unemployment rate doesn't improve and people aren't able to go back to work along with the stimulus checks drying up, what would happen to both brick and mortar and online stores? I can imagine that they would both be impacted by this.

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    That makes sense for April. With restaurants, bars, concerts, theaters, clubs, etc all shut down, there was simply less things for Americans to spend their extra money on, that they usually do. Online shopping certainly got some of that action, but only a fraction.

    And of course with millions losing their jobs, being furloughed or having their pay cut by 10-50% for months to come, also makes sense we all went super frugal.

    I know a lot of people invested their stimulus checks into stocks or just tucked it into a savings account, if they weren't too effected by all this. But of course many used the stimulus and unemployment benefits just to survive.

    Either way, not many were in the mood, or could they stimulate the economy with consumer spending. Which makes all the sense in the world.

    Unless Congress gives out more money, May should look way worse overall. As things slowly reopen though, I do expect things to slowly climb back to 'normal' over the next coming months. But it will be a long while before we ever get back to 100% of where we were. With many industries being hit so hard, 100% recovery could take years. But getting back to 60-80% of where we were I think could take as little as a few months.

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    Yeah I think you're right, and from what I'm seeing it's coming down to recovery based on regions.