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- Economic reopenings aren’t the primary driver behind the broad rebound in consumer spending, JPMorgan said Wednesday, citing Chase credit- and debit-card data.
- While the onset of widespread lockdowns pushed spending down roughly 40% year-over-year, the metric has since retraced half of its decline and is steadily ticking higher, Jesse Edgerton, senior economist at JPMorgan, wrote in a note.
- Yet the differences across states without quarantine orders, with lifted orders, and with remaining orders are negligible. The trends suggest “lifting formal restrictions has not been enough to restart consumers’ engines when they remain concerned about COVID-19,” the economist said.
- Data showed greater changes in specific categories, with spending far more concentrated at supermarkets and wholesale clubs than on travel, lodging, and restaurants.
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Americans are spending again, but the trend may not forecast the economic recovery markets are hoping for.
Using Chase credit and debit card data, JPMorgan found consumer spending has “rebounded significantly” from its late-March trough. While the start of major lockdowns pushed spending down 40% year-over-year, the metric has retraced roughly half of its decline as of May 23.
Yet the bounce-back in consumer spending doesn’t appear to be driven by economic reopenings, the bank said in a Wednesday note.
By splitting spending by locale, JPMorgan tracked the uptrend in states without any stay-at-home orders, with orders that ended on May 18, and those with orders still in place on May 19. While economies that ended lockdowns saw the biggest gains across credit-card spending, the three categories’ trend lines remain closely grouped together through the end of last week.
Assessing spending data by state reopening dates suggests “lifting formal restrictions has not been enough to restart consumers’ engines when they remain concerned about COVID-19,” Jesse Edgerton, senior economist at JPMorgan, wrote.
The bank added that the minor improvements in reopened states like Texas and Georgia are small in comparison to the major decline seen throughout the US.
The spending rebound is also concentrated in specific sectors, JPMorgan found. Consumers flocked to supermarkets immediately after lockdowns took effect, with spending in the sector nearly doubling at its late-March peak. The category has since avoided sliding into a year-over-year decline along with spending at discount stores and some other retailers. On the other hand, spending on restaurants, hotels, entertainment, healthcare, and travel “remains deeply depressed,” Edgerton wrote.
While economies are beginning to reopen throughout the US, the bank’s note also suggests a prolonged slump for in-person spending. “Card-not-present” spending, which loosely equates to online shopping, returned to year-over-year growth by late April after an initial decline. Yet spending that required in-person card use remains well below pre-pandemic levels.
The trend could forecast a gloomy future for small businesses that rely on foot traffic, as relaxed quarantine orders fail to shift spending from online vendors to physical retailers.
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