Survey: US consumer sentiment during the coronavirus crisis

While consumer optimism remains steady, we see signs of discretionary spend recovery.

As the big changes of 2020 continue to play out—digital transformation, the move to a homebody economy, and shock to loyalty—new signs point to the beginning of spend recovery. Credit-card spend reflects elements of growth, and more than half of US consumers expect to spend extra to treat themselves starting now and continuing post-COVID-19. In addition, out-of-home activity and spend intent is accelerating among those who have been vaccinated.

Steady overall cautious optimism: Overall economic optimism has stayed relatively flat since autumn, with continued caution about venturing out of home

While economic optimism recovered steadily from late spring to early autumn, since October, about 40 percent of US consumers are consistently optimistic, while just under 15 percent remain pessimistic.

Similarly, out-of-home engagement improved from late spring to early fall, but since September, about two-thirds of consumers remain hesitant to regularly venture out of home.

Signs of spend recovery: We see signs of discretionary spend recovery coming both in the shorter and longer term

Overall spend is on a path to recovery with monthly credit-card spend showing shoots of growth and smaller losses thus far in 2021. Over the last six months credit-card spend was equal to the year prior versus the decline in revenue seen in the first six months of the pandemic. Stimulus payments and holiday pull-through have influenced recent growth.

Discretionary spend has accelerated since summer 2020 in COVID-19 “essentials” categories (home furnishings for example). Some categories that have been depressed by COVID-19 are starting to recover as well (for example, spending at apparel/department and cosmetics stores) as year-on-year losses decrease.

More than 50 percent of US consumers expect to spend extra by splurging or treating themselves, with higher-income millennials intending to spend the most.

Around half of consumers who plan to splurge are pandemic-fatigued and intend to spend soon, particularly on discretionary categories such as apparel, beauty, and electronics. The other half is waiting for the pandemic to fully resolve, and plan to splurge mainly in experiential categories such as restaurants and travel.

With the latest stimulus checks being released in mid-March as well as consumers’ desire to spend extra, we expect to see spending continue to increase in 2021.

Vaccination accelerating recovery: Early signs point to differences in behavior between consumers who are vaccinated and those who are not

When comparing those who are vaccinated already to those who say they are likely to get vaccinated, vaccination drives more out-of-home activity (with 33 percent engaging out of home versus 22 percent among those who intend to be vaccinated) and drives higher spend intent, particularly for out-of-home activities (such as restaurants, out-of-home entertainment, and travel).

Greater spend and out-of-home activity will continue to pick up as younger consumers receive the vaccine. That’s because the currently vaccinated group is comprised largely of baby boomers, who indicate a lower propensity to spend, and because younger consumers have a greater desire to spend and greater opportunity for activity.

Meanwhile, about half of those who say they are unlikely to be vaccinated are already engaging in regular out-of-home activity, however have similar spend intent to the non-vaccinated population at large.

Continued digital stickiness: As consumers expand their digital lives during COVID-19, they have found several new behaviors that they expect will stick

All retail categories have seen an increase in online penetration, with retail-oriented credit-card and debit-card spend as a percent of total increasing 35 percent from January 2020 to January 2021.

Retail categories with higher online penetration before COVID-19 saw a dramatic increase in percent spent online during April’s shelter-in-place rules, growing from 37 percent penetration before COVID-19 to over 80 percent at its highest. While penetration went down during the second half of 2020, it has remained at a higher level than before COVID-19, with online penetration in January 2021 at 48 percent.

Consumers intend to continue with many digital behaviors even after COVID-19 subsides, including restaurant curbside pickup (about 30 percent penetration, with about half intending to continue post-COVID-19) or use of digital health-and-wellness tools (over 10 percent penetration with 70 to 80 percent intent to continue post-COVID-19).

Rebalancing of homebody economy: Consumers have made substantial investments in their home life which they want to continue, even after the pandemic subsides

Consumers have made structural changes to their homes which will create lasting change (28 percent renovated their homes, or set up a gym or a workspace; 19 percent have changed their living situation); and people are still investing in their homes (30 percent plan to splurge on items for their home after the pandemic).

However, consumers are also excited to spend more time and money outside of their homes post-COVID-19: about 30 percent of consumers say they will spend more on in-person restaurant dining, out-of-home entertainment, and travel.

Evolution of loyalty: 2020 brought a meaningful shock to loyalty, and consumers continue to expand their sampling of new brands and new digital shopping methods

Of the three quarters of Americans who changed their shopping behavior since COVID-19 began, around 40 percent say they have changed brands, with the level of brand switching doubling in 2020 compared to 2019. These switching behaviors are more prevalent among Gen Z and millennial consumers than with boomers (44 percent of Gen Z and millennials have tried a new brand, versus 35 percent of boomers).

Convenience and value have been the main drivers of shopping behavior change; however, quality and seeking brands that match with their values also inspire change for about 40 percent of younger consumers.

While growth in consumer goods was driven by large companies at the beginning of the pandemic, we see that brands from smaller companies are increasingly driving growth in late 2020 and early 2021.

These exhibits are based on survey data collected in the United States from February 18 through 22, 2021. Check back for regular updates on US consumer sentiments, behaviors, income, spending, and expectations.

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