The year 2020 has been an active experiment in consumer confidence. As the number of new cases of COVID-19 continues to fluctuate in the United States and across the world, shopping and saving habits follow suit. It begs the question: how has COVID impacted the way we spend?
Compared to last year, consumers are:
- Saving more. When
the world seems unpredictable, saving money is a reasonable response
– it creates a buffer against sudden job loss, reduced income or
unexpected expenses. In the early days of the pandemic, Americans
buckled down and started saving more
money than ever before: Approximately one-third of all
disposable income was set aside in case of an emergency.
- Investing less. As
late as August, a Gallup poll indicated that 76% of Americans who
saved money deposited it in a savings
or checking account. The motivation may be to keep savings
liquid and easily accessible, rather than stowed in a retirement
account, stocks or bonds, real estate or other assets.
- Borrowing more.
Consumer credit is up more than 3
percent from the same time last year, according to a report on
Florida spending. Typically, that’s an indication of higher
consumer confidence – but this year, it may have been triggered by
job loss or hardship which put families behind on bills.
- Tracking the news.
Consumer confidence typically takes cues from the headlines. This
year, customers are basing their purchasing decisions on how
confident they feel about whether or not a vaccine development or
treatment plan is forthcoming. Political shifts – like the
upcoming presidential election – may also influence shoppers’
willingness to spend.
- Shopping at a distance. As shoppers avoid store aisles and spend more time at home, COVID-19 has accelerated growth in e-commerce and delivery. As the holidays approach, business is likely to ramp up even more for online shopping platforms.
Some shoppers may anticipate change on the horizon. In late September, consumer confidence seemed to spike as Americans pinned their hopes on an economic rebound. The stock market continues to yield strong results, even as investors express uncertainty about the future.
However, it’s not yet certain what the coming months have in store – and now is the time to be sure that you’re prepared. As the holidays approach, consider reassessing your family’s finances, budget and long-term saving goals. With mobile and online checking, it’s easy to start saving, track spending, pay bills and deposit checks without making a trip to the bank – and you’ll be more prepared for whatever the future brings.
Axiom Bank, N.A., a nationally chartered community bank headquartered in Central Florida, provides retail banking services, including checking, savings, money market and CD accounts, as well as commercial banking, treasury management services and commercial loans for both real estate and business purposes.