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

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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:


Can We Afford Trillions in Stimulus to Combat COVID-19?

The United States has approximately $150 trillion of total consolidated private and public assets and $100 trillion total net wealth (assets minus liabilities). The $1.5 trillion monetary stimulus portion is about 1% of our asset base, so for context, it is far from being financially ruinous. We are a very wealthy nation with vast financial and intellectual capabilities.

The Federal Reserve action of lowering interest rates and driving the 10-year treasury yield into negative real yield territory causes concern that it will eventually produce inflation. But maybe not. The Great Recession of 2008 and 2009 contain interesting and important economic history lessons regarding inflation. In response to this severe downturn, interest rates were reduced to near zero and the world was flooded for many years with US dollars, usually causing concern that inflation will ensue, yet inflation remained stubbornly low; as economic theory might have predicted, the classic scenario of too many dollars chasing too few goods did not unfold.

The world was simply too productive, spitting out goods and services at a rate unheard of just a few decades earlier, primarily due to new technologies in the fields of manufacturing, communications, transportation, and information systems. What ensued were too many dollars chasing too many goods, neutralizing the inflationary effect. By logical extension, deflation, to some extent, would have most likely occurred absent the monetary and fiscal stimulus. In short, inflation (or deflation) is the interplay between the money supply and productivity.

One of the best barometers and leading indicators of inflation is a basket of commodity prices which have, in real terms, generally been depressed over the past decade, not government statistics which are lagging indicators and can be improperly defined and collected, hence less reliable.

If this is truly a national emergency, a substantial fiscal stimulus is warranted, assuming it is applied properly. And that is a big assumption. Though large chunks of fiscal stimulus are designed to meet short-term needs, like a spike in immediate health care costs associated with the virus, and to soften a variety of financial hardships, there will be a significant set-aside for longer term projects to stimulate the economy in an attempt to avoid a recession.

Even prior to this national emergency, there was much debate regarding infrastructure projects to “rebuild our crumbling infrastructure.” The response should always be to build a business case, on a project-by-project basis, for public dissemination. With a conservative set of underlying assumptions, each project should estimate the discounted future cash flows to determine if it makes economic sense and, given that we have limited resources, compared to the net returns of other competing projects. There should always be (but probably are not) a backlog of these “shovel-ready” projects with well thought out and documented financial plans on the shelf at all times for just these kinds of emergencies.

Equally important, a rigorous post-audit process of public sector capital projects to measure what was projected in cost outflows and future beneficial inflows to the actual results, are required for accountability and full transparency on public record. Developing better forecasting skills and techniques is essential to enhance future efficiency in the allocation of limited capital. You get what you measure. And if you don’t measure it, you won’t get it.

Since interest rates are at historic lows, it makes sense to undertake valid infrastructure projects now versus later when both costs and interest rates may be at significantly higher levels. The reality is we probably have been significantly underinvesting in legitimate public infrastructure projects. The time is now when the economy desperately needs the appropriate stimulus.

Though often projects make sense and have public support, many people hesitate because it is subject to the wheeling-and-dealing of politicians, who have a dismal record of efficient execution. Coupled with this, are special interest constituencies which risk steering public funds to projects that have the most influential backers, not the highest return. Additionally, public sector projects have a storied history of massive cost overruns—poor planning, cronyism, corruption, and costly union preferences in certain jurisdictions. These factors serve to cast doubt and undermine public support for otherwise valid investment projects that benefit future economic growth and opportunity, as well as providing meaningful employment and additional economic growth in the short run.

Over a decade ago, we undertook infrastructure stimulus measures to confront another crisis, with less than stellar execution and results. Let’s get this one right by developing a new set of processes and procedures that will not only make this stimulus package much more effective, but will serve us well whenever a massive crisis arises requiring similar measures. If accomplished, it would represent a valuable silver lining to this crisis.

All eyes are on our political class to see if it is up to the task.


Richard Smith has a range of business experience from private development stage start-ups to $300-million public companies. As chief financial officer, he led a successful $132-million initial public offering (IPO) and many private placements to fund and capitalize high-growth companies. Currently, Smith is the Managing Director of an advisory firm specializing in analyzing economic and financial conditions and their impact on financial projections and operations. Smith received his MPhil from Cambridge University and is a certified public accountant (CPA).

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