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US Spend Trends And The Impact Of Covid-19

17 April 2020
using a contactless card

Across the payments industry and beyond, there is a natural urgency to understand how consumer spending patterns have changed following the outbreak of the novel coronavirus around the world.

A new report from our colleagues at Argus, a Verisk Financial business – leveraging their unique transactional data – throws light on trends emerging in the United States, including changes at national and regional levels, across merchant categories, and in the shift from in-store to online purchases.

The year began well as consumer spending on cards remained steady. All looked well on the horizon, too, despite rumblings of a new illness spreading in China. However, as the geographical scope of the disease expanded, that all began to change. In March, total spending took a sharp turn downward, with purchases reporting an 8.8 per cent year-on-year (YoY) decline and transactions down by 12.3 per cent YoY. Meanwhile, the average ticket size grew by 4.1 per cent year-on-year. Spend and transactions at the point of sale declined by 13 per cent and 18 per cent, respectively, while online spend and transactions showed higher YoY growth at 2.9 per cent and 9.6 per cent, respectively.

us consumer spending trend chart
Source: Argus Covid-19 Dashboard

From 14 March, with travel restricted and a national emergency declared, American spending patterns and behaviours dramatically changed. In the latter half of March, YoY growth in total purchases fell by 20.4 per cent, with differentiation apparent between purchases in stores (down 26.2 per cent) and online (down 4.3 per cent). The only categories that saw positive change were Food Stores/Grocery, Wholesale Retailers and Drug Stores.

While panicked shopping benefited some industries, a call for social distancing, avoidance of non-essential travel and work-from-home changes decimated others. Airlines, department stores and restaurants, to name three prominent sectors, suddenly found themselves in a grim environment. Some are moving their business online, continuing services that do not necessarily require face-to-face interaction.

Regardless of the industry, it is evident that most are facing a stark new reality as the nature of purchasing now changes from stores to online, altering the business structure for many. While some businesses will easily adapt to the new environment, particularly those with strong and scalable online offerings, others lack options and will need to be more creative to weather the storm.

Argus, a Verisk Financial business, has created Covid-19 Spend Dashboards to aid the understanding of impacts, indicators, and trends concerning purchase behaviours. Data can be viewed at the national, state or county level, broken down by merchant category and further separating in-store and online purchases. To find out more, please contact us.