How the pandemic has changed consumer spending
MADISON, Wis. (WMTV) - Consumer spending trends have changed drastically since the start of the pandemic.
People are spending less on some things and more on others. Researchers are tracking those trends to understand where spending is headed and the future of our economy.
“We’re a big piece of the economy. Consumer sentiment, how we feel, how confident we are, how much we’re willing to spend is a big driver for economic growth,” said UW-Madison Prof. Cliff Robb.
Tracking our spending habits helps companies make decisions like setting prices and future sales.
“If consumers are concerned and holding back dollars that hurts businesses, economic growth, and ultimately can have an impact on those same consumers,” said Prof. Robb.
In a pandemic, spending more time at home means spending more money on the home. Consumers spent more on things like pet supplies, home entertainment, video games, and exercise equipment.
Home office item sales also increased, along with delivery sales in a series of industries. Experts say there was an overall spike in spending on convenience. That’s likely to continue.
“Consumers are going to demand more flexibility moving forward because we now know it can be that way,” said Prof. Robb.
Looking ahead, the economy is making a comeback as COVID-19 infection rates are down and vaccination rates are up. The travel and hospitality industries were among the first to lose money when the pandemic hit and now its one of the first to come back.
“Travel...last year it was one of the biggest categories that was effected and this year there’s a great deal of pint up demand and prices are going through the roof,” said Nancy Wong, UW-Madison Professor.
Wong studies consumer decision making. She says in the last year, consumers have spent the most on things they can enjoy at home. Businesses are still trying to meet those demands. Wong says one trend that will certainly stick around is the increase in online shopping.
Wong also says we also saw an increase in people saving money during the pandemic, likely due to the uncertainty it caused.
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