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Study shows consumer spending bouncing back in WV

A state-by-state analysis finds that overall consumer spending in West Virginia has returned to pre-pandemic levels.  The analysis was done by the Harvard-based research group Opportunity Insights which looked at how consumers are behaving now compared with before the virus took hold.

The research shows that total consumer spending this month in the state has been equal to or higher than January levels.

Consumer activity in the state, as well as the nation, plummeted starting in mid-March when the pandemic forced the economic shutdown.  By March 20, consumer spending in the state was down 30 percent and it remained in the tank for several weeks.

There was an abrupt uptick in consumer spending here and across the country starting in mid to late April when government relief money began to flow to businesses and workers who had been furloughed or laid off.  The influx pushed up consumer spending in West Virginia back to pre-pandemic levels in less than two weeks.

Here are some other relevant findings on consumer spending in West Virginia during the pandemic:

—Restaurants and bars have been hit the hardest.  Consumer spending in those industries dropped by two-thirds during the worst of the shutdown and as of last week were still down 24 percent from pre-pandemic levels.

—Consumer spending on health care nose-dived in March when routine medical procedures were curtailed.   The Harvard analysis shows that spending in that area has returned to what it was in January.

—The trend in the grocery store business has been interesting.  Consumer spending on essentials spiked during the early stages of the pandemic at 50 percent above normal levels as shoppers rushed to stock up.    That dramatic increase lasted about two weeks and has not returned to normal.

—West Virginians are still not spending nearly as much on entertainment as they were before COVID-19 hit. The analysis shows the amount of money going toward entertainment is now less than half what it was last January.

—Spending by high income earners in the state dropped 44 percent during the shutdown and is still about seven percent below January levels. Consumer spending by lower income West Virginians has returned to near normal levels after dropping by one third.

Economists interviewed by the New York Times agree the pandemic-induced recession has been particularly hard on the service sector.  “Service jobs depend directly on spending—and the whims—of the well-off,” the Times reported.

“The highest-earning quarter of Americans has been responsible for about half of the decline in consumption during this recession,” said the Times, “And that has wreaked havoc on the lower wage service workers on the other end of many of their transactions.”

On the plus side, the research shows that West Virginia is among the four states—the others are Indiana, Kentucky, and Tennessee—where all consumer spending is now at least three percent higher than it was at the start of the year.





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