Consumer Responses to the COVID-19 Pandemic

Noah Williams

Executive Summary:

As the COVID-19 pandemic has spread across the United States, consumers have changed their spending habits dramatically. Initially, the changes began with people canceling inessential travel, limiting attendance at large gatherings, generally limiting social exposure, and moving from purchases in-store to online. Social distancing guidelines in most of the US tightened throughout the month of March, with the issuance of public emergency declarations, and an increasing number of states implementing “stay-at-home” orders closing down non-essential businesses. These changes, and the increasing severity of the crisis, accelerated the changes in consumer behavior, and also led to spikes in certain purchases, particularly at grocery stores. By the end of March and into April, consumer behavior has roughly stabilized, but with vastly different buying patterns and behavior compared to only a few weeks ago.

In this brief I analyze consumption trends nationwide and in Wisconsin, using a new data source of weekly transactions. I find that the recent monthly decline of roughly 9% in national retail sales masks a 10% increase mid-March and a 20% decline by the end of the month. There was a spike in grocery store sales of 80% nationwide and 100% in Wisconsin mid-March, driven as much by a growth in sales-per-transaction as transactions. The consumption decline overall was cushioned by increasing on-line sales, which also reallocated sales. In Wisconsin, total sales were down 15% at the end of March, but in-store sales were down 30%, with online sales up 20%.

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