Consumers may be ready to release their pent-up demand
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Even though the unemployment rate is still, frankly, pretty scary, most of the people in this economy who want to be working are.
And some have been able to save money through the pandemic because with all the lockdowns, those fortunate enough to have cash to spend had fewer places to spend it.
All of this has some economists predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated.
A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut.
But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers.
“I wouldn’t expect a boom, but people will be back in the store, and there will be pent-up demand for the experience,” Corlett said. A lot of people enjoy browsing in stores, especially after months of forced online shopping.
Another area expecting a post-pandemic boost: travel.
“I’ve talked to some clients within the hospitality industry. And they are seeing folks start to book again for the back half of the year. So there is some optimism there,” said Katie Thomas, who runs the Kearney Consumer Institute.
Optimism yes, but many of those bookings and deposits can be canceled and refunded. Plus, Yale economist Stephen Roach said, “I think we’ve released a lot of pent-up demand into the economy already.”
He points to data on sales of durable goods. Throughout the pandemic, those who can spend money have been doing so — on furniture, large appliances and such.
“The fortunate have managed to do well, but a large swath of the nation has not, and they’re unlikely to unleash anything in the way of pent-up demand,” he said.
Roach said we probably will see some surge in spending, but not necessarily enough to spur a quick recovery.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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