A new report from a market research company the NPD Group stated that the consumer purchasing pattern has seen a change after the COVID-19 pandemic. Consumers in developed countries spent excessively on appliances, automobiles, and furniture. The binge was most notable in America, where it was fuelled by three rounds of ‘stimmy’ cheques, an economic stimulus payment method made to Americans by the US government as part of a coronavirus relief package.
Consumers also bought alternatives for the services they no longer had access to, such as an exercise bike to compensate for closed gyms. They also splurged on luxury items such as watches and jewellery as a result of having a little extra cash.
The composition of consumer spending changed dramatically after a year into the pandemic. Goods accounted for 42% of household spending in America are up by 36% before the pandemic. Services accounted for 58% and are down by 64%, a drop worth more than $900bn per year.
Goldman Sachs’ Daan Struyven and Dan Milo evaluated the evolution of goods consumption in real terms across 23 Organisation for Economic Co-operation and Development (OECD) nations. Several Western countries saw a similar increase in goods consumption, however, few saw a greater increase than the United States.
According to the OECD figures, the Nordic countries also splurged. On average they had spent about 5% more on goods in 2021 compared with 10% in America.
According to the Bureau of Labour Statistics in the United States, consumer-price inflation increased by 5% points in the year to April 2022, after decreasing by 0.2 percentage points in the year 2021.