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US Consumer Spending Remains Steady, No Signs of Early Peak Season Surge

consumer spending PPolicy uncertainty leads to slowing of shipments of export cargo and import cargo in international trade.

US Consumer Spending Remains Steady, No Signs of Early Peak Season Surge

Recent data from the US Bureau of Economic Analysis (BEA) reveals that consumer spending in the US has not experienced a sudden surge, supporting the idea that the early peak season for container goods is driven more by front-loading of imports than by an increase in consumer demand.

Read also: US Consumer Spending Trends Reshaping Container Shipping Dynamics

© Sea-Intelligence

According to Sea-Intelligence, the year-on-year (YoY) growth rate for ‘durable goods’ declined sharply in early 2024 and, despite a recovery, has not reached 2023 levels. Conversely, spending on ‘non-durable goods’ has shown consistent growth since late 2022, but there has been no unexpected spike in consumer spending during late spring and early summer of 2024.

The only notable rise in consumer expenditure within the ‘goods’ category is in ‘recreational goods and vehicles,’ which jumped from 10.2% in 2019 to 15.1% in June 2024. However, Alan Murphy, CEO of Sea-Intelligence, highlighted that this increase is primarily driven by ‘information processing equipment,’ such as ‘computer software and accessories,’ which do not rely on container shipping. As a result, the boost in consumer spending in this sector has not translated into significant growth for the container shipping industry.

© Sea-Intelligence

Murphy emphasized that none of the categories supporting container shipping have seen substantial growth recently, suggesting that the uptick in container volumes in May and June was largely due to the front-loading of peak season cargo rather than a genuine surge in consumer demand. Additionally, the US Census Bureau reported no significant jump in container demand before the sharp rise in container spot prices.

consumer spending

States With the Biggest Drop in Consumer Spending During COVID-19

The latest surge in COVID-19 cases caused by the Omicron variant once again disrupted an economic recovery that has been uneven to date. While most jurisdictions did not resort to the same sorts of public health restrictions instituted in early 2020, many businesses struggled to operate at full capacity with employees sick due to COVID and many consumers behaving more cautiously. Industries that have been hard-hit throughout the pandemic, like restaurants and airlines, experienced new disruptions heading into 2022.

Economic challenges associated with Omicron and future variants could once again depress consumer spending, piling on top of an unusual decrease in consumer expenditures during the pandemic’s first year. For most of the last 60 years, consumer spending has increased year over year, even during economic downturns. But from 2019 to 2020, overall consumer spending fell by 2.6%, the largest year-over-year decline since the Great Recession.

COVID’s effects on consumer spending have not been consistent across all categories, which means that some industries are struggling more than others. Public health restrictions affecting certain types of businesses and consumers’ shifting preferences from spending more time at home have driven trends in expenditures. In some cases, these factors have created divergent spending trends between similar categories. For example, spending on food services and accommodations dropped by 20.5% from 2019 to 2020, while spending on groceries was up 11.2% over the same period. Similarly, recreation services—which includes businesses like sports venues and theaters—saw the largest overall decline at 28.6%, but recreational goods and vehicles saw the largest overall increase at 13.1%.

In addition to differences by spending category, declines in consumer spending also varied by geography. The region with the greatest drop in spending was the Mideast (including Delaware, New Jersey, New York, Pennsylvania, and Maryland), with a 4.07% decrease from 2019 to 2020, followed by the Far West at 4.03%. In contrast, the Rocky Mountain region had the lowest decrease, with consumers spending only 1.25% less in 2020 than in 2019.

Among states, most of the locations where consumer spending dropped the most were found in the Mideast, Far West, and New England regions. For most of these states, the declines are explained in large part by decreases in spending on recreation services, transportation services, or both. Recreation services were slow to return to full capacity in many locations because they were considered less essential and frequently likely to contribute to the spread of the coronavirus. Areas with high populations of commuters usually relying on vehicles or public transportation, like densely populated areas in the Northeast, saw declines in transportation spending with the greater transition to remote work.

The data used in this analysis is from the U.S. Bureau of Economic Analysis’s Personal Consumption Expenditures. To determine the states with the biggest drop in spending during COVID-19, researchers at Filterbuy calculated the percentage change in per capita consumer spending from 2019 to 2020. In the event of a tie, the state with the lower total change in per capita consumer spending from 2019 to 2020 was ranked higher.

Here are the states with the biggest drop in spending during COVID.

State Rank Percentage change in consumer spending (2019-2020) Total change in consumer spending (2019-2020) Per capita consumer spending (2020) Per capita consumer spending (2019) Category with the largest decrease in spending
Alaska    1    -5.4% -$2,760 $48,739 $51,499 Recreation services
Massachusetts    2    -5.0% -$2,762 $52,001 $54,763 Transportation services
Hawaii    3    -4.7% -$2,233 $45,080 $47,313 Transportation services
New York    4    -4.6% -$2,416 $49,735 $52,151 Transportation services
Minnesota    5    -4.6% -$2,129 $44,403 $46,532 Recreation services
Maryland    6    -4.4% -$2,051 $44,331 $46,382 Recreation services
California    7    -4.3% -$2,086 $46,636 $48,722 Recreation services
Pennsylvania    8    -3.9% -$1,828 $44,650 $46,478 Recreation services
Vermont    9    -3.8% -$1,888 $47,397 $49,285 Recreation services
Nevada    10    -3.8% -$1,532 $39,211 $40,743 Gasoline and other energy goods
North Dakota    11    -3.7% -$1,668 $43,945 $45,613 Gasoline and other energy goods
Rhode Island    12    -3.7% -$1,660 $42,944 $44,604 Gasoline and other energy goods
Washington    13    -3.5% -$1,647 $46,041 $47,688 Transportation services
Delaware    14    -3.2% -$1,526 $45,434 $46,960 Transportation services
Florida    15    -3.1% -$1,376 $43,615 $44,991 Transportation services
United States    -3.0% -$1,311 $42,635 $43,946 Recreation services

 

For more information, a detailed methodology, and complete results, you can find the original report on Filterbuy’s website: https://filterbuy.com/resources/consumer-spending-covid/