How Much Is Consumer Spending Still Being Impacted By COVID-19?

During the second quarter of 2020, macroeconomic activity and consumer spending declined dramatically due to the impact of government policies implemented to reduce the spread of COVID-19. Globally, the widely accepted method for mitigating the spread of the virus was to limit human movement and interactions. Strict lockdowns aimed at limiting the spread of this new and deadly virus kept consumers at home and many businesses closed their physical operations. In general retail establishments selling groceries were deemed essential and remained open, and many consumers switched to online delivery services for fresh food as well as pantry staples. But stores selling discretionary items such as clothing saw their business dry up; in the U.S. that led to an acceleration of the decline of brick-and-mortar retail. In addition, many businesses providing consumer services were forced to close. Due to the near-total shutdown of economic activity, second-quarter GDP in the U.S. decreased by 31.4% (% change vs. prior period annualized), while revenues for companies in the Consumer Discretionary sector in the S&P 1500 fell by 15.3% year-over-year.