Wednesday, June 17, 2020

Boats, Pools and Home Furnishings: How the Lockdown Transformed Our Spending Habits

Consumers who held on to jobs or who are getting government benefits have seen bank accounts swell during the coronavirus pandemic because of restrictions on shopping and tourism. Now, they are spending with surprising strength to renovate homes and entertain families.

By Matthew Dalton and Suzanne Kapner of The WSJ. Excerpts:
"But many consumers in the U.S. and Europe who have held on to their jobs or are getting government benefits have seen their bank accounts swell during lockdowns, according to government data, because of restrictions on shopping and big-spending activities such as tourism.

Consumers with means are driving surprising strength in a number of sectors. People are flocking to home-improvement stores and car dealerships. They want to install pools in their backyards and Jacuzzis in their bathrooms. Spending on furniture has jumped. So have sales of fitness and sports equipment."

"For those still employed, paychecks have continued to roll in. Many of those laid off or whose businesses are suffering also have cash in hand, at least for now, as governments step in to replace much of their lost income. These measures include checks sent directly to consumers and increased unemployment benefits. In Europe, governments are subsidizing tens of millions of paychecks in order to persuade companies to forgo layoffs."

"So far though, deposits in commercial banks in the U.S. hit growth records in March and April and surged again in May.'

"the average balance of smaller accounts—those with less than $5,000—was up 30% to 40% at the end of May compared with 12 weeks previous, before the U.S. went into lockdown."

"Revolving consumer credit outstanding—mainly credit cards—fell in April by $56 billion, or 5.5%, the biggest monthly drop on record"

"For the week ended June 6, sales at home improvement retailers jumped 32%, while sales at furniture stores were up 6%, compared with the same week last year"

"U.S. car sales rebounded in May after a historic drop in April, easily beating analysts’ expectations. Though they were 30% lower than in May 2019, dealerships in many states are still closed. Dealerships that are open are running out of popular models."

"Also in France, demand for Jacuzzis and other home spa equipment is booming. “Spa sales have been explosive,” said Hervé Mery, who owns a spa and pool business east of Paris. “We’re selling one a day. Before the lockdown it wasn’t even one a week.”"

Related post

Has the pandemic changed tastes (which change demand)? (From May 28)

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