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How U.S. Consumers are Spending Differently During COVID-19

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In 2019, nearly 70% of U.S. GDP was driven by personal consumption.

However, in the first quarter of 2020, the COVID-19 pandemic has initiated a transformation of consumer spending trends as we know them.

Consumer Spending in Charts

By leveraging new data from analytics platform 1010Data, today’s infographic dives into the credit and debit card spending of five million U.S. consumers over the past few months.

Let’s see how their spending habits have evolved over that short timeframe:

How U.S. Consumers are Spending Differently During COVID-19

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The above data on consumer spending, which comes from 1010Data and powered by AI platform Exabel, is broken into 18 different categories:

  • General Merchandise & Grocery: Big Box, Pharmacy, Wholesale Club, Grocery
  • Retail: Apparel, Office Supplies, Pet Supplies
  • Restaurant: Casual dining, Fast casual, Fast food, Fine dining
  • Food Delivery: Food delivery, Grocery Delivery, Meal/Snack kit
  • Travel: Airline, Car rental, Cruise, Hotel

It’s no surprise that COVID-19 has consumers cutting back on most of their purchases, but that doesn’t mean that specific categories don’t benefit from changes in consumer habits.

Consumer Spending Changes By Category

The onset of changing consumer behavior can be observed from February 25, 2020, when compared year-over-year (YoY).

As of May 12, 2020, combined spending in all categories dropped by almost 30% YoY. Here’s how that shakes out across the different categories, across two months.

General Merchandise & Grocery

This segment saw a sharp spike in initial spending, as Americans scrambled to stockpile on non-perishable food, hand sanitizer, and toilet paper from Big Box stores like Walmart, or Wholesale Clubs like Costco.

In particular, spending on groceries reached a YoY increase of 97.1% on March 18, 2020. However, these sudden panic-buying urges leveled out by the start of April.

 Feb 25, 2020 YoY SpendingMay 5, 2020 YoY SpendingOverall Change
Big Box+14.2%-1.5%-15.7%
Grocery+1.0%+9.4%+8.4%
Pharmacy-3.6%-23.8%-20.2%
Wholesale Club+13.0%+2.6%-10.4%

Pharmaceutical purchases dropped the most in this segment, possibly as individuals cut back on their healthcare expenditures during this time. In fact, in an April 2020 McKinsey survey of physicians, 80% reported a decline in patient volumes.

Retail

With less foot traffic in malls and entire stores forced to close, sales of apparel plummeted both in physical locations and over e-commerce platforms.

 Feb 25, 2020 YoY SpendingMay 5, 2020 YoY SpendingOverall Change
Apparel-5.6%-51.9%-46.3%
Office Supplies-8.9%-2.8%+6.1%
Pet Supplies+2.7%-18.5%-21.2%

Interestingly, sales of office supplies rose as many pivoted to working from home. Many parents also likely required more of these resources to home-school their children.

Restaurant

The food and beverage industry has been hard-hit by COVID-19. While many businesses turned to delivery services to stay afloat, those in fine dining were less able to rely on such a shift, and spiraled by 88.2% by May 5, 2020, year-over-year.

 Feb 25, 2020 YoY SpendingMay 5, 2020 YoY ChangeOverall Change
Casual Dining-2.7%-64.9%-62.2%
Fast Casual4.2%-29.6%-33.8%
Fast Food2.0%-20.9%-22.9%
Fine Dining-18.6%-88.2%-69.6%

Applebees or Olive Garden exemplify casual dining, while Panera or Chipotle characterize fast casual.

Food Delivery

Meanwhile, many consumers also shifted from eating out to home cooking. As a result, grocery delivery services jumped by over five-fold—with consumers spending a whopping 558.4% more at its April 19, 2020 peak compared to last year.

 Feb. 25, 2020 YoY SpendingMay 5, 2020 YoY SpendingOverall Change
Food Delivery+18.8%+67.1%+48.3%
Grocery Delivery+23.0%+419.7%+396.7%
Meal/ Snack Kit+7.0%-5.9%-12.9%

Food delivery services are also in high demand, with Doordash seeing the highest growth in U.S. users than any other food delivery app in April.

Travel

While all travel categories experienced an immense decline, cruises suffered the worst blow by far, down by 87.0% in YoY spending since near the start of the pandemic.

 Feb 25, 2020 YoY SpendingMay 5, 2020 YoY SpendingOverall Change
Airline-7.7%-99.1%-91.4%
Car Rental-6.3%-86.0%-79.7%
Cruise-18.7%-105.7%-87.0%
Hotel-7.0%-85.9%-78.9%

Airlines have also come to a halt, nosediving by 91.4% in a 10-week span. In fact, governments worldwide have pooled together nearly $85 billion in an attempt to bail the industry out.

Hope on the Horizon?

Consumer spending offers a pulse of the economy’s health. These sharp drops in consumer spending fall in line with the steep decline in consumer confidence.

In fact, consumer confidence has eroded even more intensely than the stock market’s performance this quarter, as observed when the Index of Consumer Sentiment (ICS) is compared to the S&P 500 Index.

Consumer Sentiment Index

Many investors dumped their stocks as the coronavirus hit, but consumers tightened their purse strings even more. Yet, as the chart also shows, both the stock market and consumer sentiment are slowly but surely on the mend since April.

As the stay-at-home curtain cautiously begins to lift in the U.S., there may yet be hope for economic recovery on the horizon.

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Markets

Pandemic Recovery: Have BEACH Stocks Bounced Back?

BEACH stocks—bookings, entertainment, airlines, cruises, and hotels—were pulverized at the beginning of the pandemic. Here’s how they’ve bounced back.

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Pandemic Recovery: Have BEACH Stocks Bounced Back?

The travel and entertainment industries have had a volatile ride over the last year.

During the initial stages of the pandemic, when panic and uncertainty ran rife, BEACH stocks–booking, entertainment, airlines, cruises, and hotels—were left scrambling. Collectively, $332 billion in market cap washed away.

Now, it appears the tide might be turning for these companies, buoyed by vaccine breakthroughs and glimmers of hope for a return to normalcy.

This infographic looks at the growth in market cap value across BEACH stocks one year from when the WHO officially declared COVID-19 a pandemic.

Washing Back to Shore?

BEACH stocks have gained a collective $376 billion in market cap in the year since the pandemic was declared, with about half the companies trading at their respective all-time highs.

In fact, about 70% of BEACH stocks have actually outperformed the S&P 500, which returned 43.7% during the same period.

CompanyTickerCategoryMarket Cap: 03/11/20 ($B)Market Cap: 03/11/21 ($B)Change
American AirlinesAALAirlines7.214.296%
Southwest AirlinesLUVAirlines23.534.446%
Alaska Air GroupALKAirlines5.78.142%
United AirlinesUALAirlines13.017.233%
Air CanadaACAirlines5.97.933%
Delta Air LinesDALAirlines29.130.96%
Expedia GroupEXPEBooking12.024.6105%
Allegiant TravelALGTBooking2.04.198%
Booking HoldingsBKNGBooking64.096.051%
Caesars EntertainmentCZRCasino & Hotel2.220.8824%
Norwegian Cruise LinesNCLHCruise & Casino4.310.9151%
Royal Caribbean CruisesRCLCruise & Casino10.822.4108%
CarnivalCCLCruise & Casino16.431.893%
Penn National GamingPENNEntertainment & Live Events2.620.4661%
Six FlagsSIXEntertainment & Live Events1.74.1142%
Live NationLYVEntertainment & Live Events10.819.379%
The Walt Disney CoDISEntertainment & Live Events201.2357.177%
Cedar FairFUNEntertainment & Live Events1.82.857%
HiltonHLTHotels25.034.638%
Marriott InternationalMARHotels35.648.235%
Choice Hotels InternationalCHHHotels4.55.930%
Hyatt HotelsHHotels6.78.729%
Marriott Vacations WorldwideVACHotels & Resorts3.87.7103%
Vail ResortsMTNHotels & Resorts7.113.488%
Park Hotels & ResortsPKHotels & Resorts3.45.358%
Wyndham Hotels & ResortsWHHotels & Resorts4.26.451%
MGM Resorts InternationalMGMResorts & Casino10.219.389%
Wynn ResortsWYNNResorts & Casino9.715.964%
Las Vegas SandsLVSResorts & Casino40.748.218%

BEACH Stocks Leaders and Laggards

When dissecting this basket of stocks by industry, it’s clear that much of the recovery story is lopsided. One reason for this, despite the pandemic, is that there are more granular, idiosyncratic trends occurring within these sectors.

Let’s look at what’s propelling the leaders, and dragging down the laggards:

Leading: Online Betting

There’s reason to be bullish on gambling stocks. Since late 2018, some 20 states have legalized sports betting, with more expecting to follow. Relative to other areas, the pandemic has been kind to gambling stocks. Many of those with an online presence have witnessed a spike in traffic, as more people continue to flock towards online betting.

Within the BEACH stocks basket, Penn National Gaming and Caesars Entertainment are clear outliers, having grown an epic 661% and 823% respectively. In addition, the broader industry (measured by the BETZ ETF) has nearly doubled the performance of the S&P 500 since its inception.

Laggard: Airlines

The return to normalcy will be much more delayed for airlines. Global RPKs, an industry metric, are not expected to reach pre-pandemic levels until 2024.

Actions of insiders also seem to match this negative sentiment. Warren Buffett, once a staunch supporter of airlines, decided to call it quits during the pandemic—dumping his entire position.

Airline COVID RPKs

U.S. airline executives have collectively been selling their stakes much more aggressively than in the last few years. To add insult to injury, there’s significant shorting of airline stocks as well. At a short interest of 11.6%, American Airlines is most heavily shorted BEACH stock.

Laggard: Hotels

In a year where social interactions and gatherings have largely disappeared, so too has much of the business activity for hotels. For instance, Hilton sales suffered a 58% decline year-over-year.

But even without the pandemic, the hotel industry had their work cut out for them, through a growing and formidable competitor in Airbnb. Airbnb can scale its network beyond what any hotel can. This is evident in its room count, which is greater than the largest hotels combined.

Airbnb room count vs hotels

More Bumps On The Road Ahead?

The investing landscape today looks to be disconnected from reality, in part because of the forward-looking nature of markets. Even though things are dire today, there’s a belief that light exists at the end of the tunnel.

But the path to recovery isn’t quite so linear. When the dust settles, it’ll become more apparent which industries will “return to normal” and which have set out permanently on a new trajectory.

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Mapped: The Top 10 Billionaire Cities

Where do the most billionaires live? For years, NYC has topped the list of billionaire cities, but 2020 marked a monumental shift.

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top 10 cities for billionaires

Mapped: The Top 10 Billionaire Cities in 2020

In 2020, the world gained 493 new billionaires—that’s one every 17 hours.

For the last seven years, New York City has been home to more billionaires than any other city in the world. However, last year marked a monumental shift in the status quo.

Beijing has unseated the Big Apple, and is now home to 100 billionaires. That’s one more billionaire than the 99 living in New York City.

Today’s map uses data from Forbes to display the top 10 cities that house the most billionaires.

Where do the Most Billionaires Live?

The richest of the rich are quite concentrated in cities, but some cities seem to best suit the billionaire lifestyle. Here’s a breakdown of the top 10 billionaire capitals and the collective net worth of all the ultra wealthy that live there.

RankCityRegionNumber of BillionairesNet Worth of the City's Billionaires
#1Beijing🇨🇳 Asia100$484.3B
#2New York City 🇺🇸 North America99$560.5B
#3Hong Kong🇨🇳 Asia80$448.4B
#4Moscow🇷🇺 Europe79$420.6B
#5Shenzhen🇨🇳 Asia68$415.3B
#6Shanghai 🇨🇳 Asia64$259.6B
#7London 🇬🇧 Europe63$316.1B
#8Mumbai🇮🇳 Asia48$265.0B
#9San Fransisco🇺🇸 North America48$190.0B
#10Hangzhou🇨🇳 Asia47$269.2B

Some cities have some obvious billionaires that come to mind. New York’s richest person and former mayor, Michael Bloomberg, is worth $59 billion. Beijing’s richest billionaire is the founder of TikTok (among other things), Zhang Yiming with a net worth of $35.6 billion.

In terms of the locations themselves, London, New York, and San Francisco are the only Western cities to make the list. Though New York was ousted from the top position last year, altogether the city’s billionaires are still worth more than Beijing’s.

One new city to make the top 10 list of billionaire cities was Hangzhou, the home of Jack Ma. It booted out Singapore from the 10th spot.

East Meets West

More than half of the top 10 cities are located in Asia, providing evidence of the shift eastwards when it comes to seats of wealth. Five of the six Asian cities listed are all in China.

What’s helped lead to this?

The country has seen an e-commerce boom, not in the least thanks to the pandemic. Additionally, the efficient handling of COVID-19 has allowed the economy to get back on track much more quickly than other countries. According to the BBC, 50% of China’s new billionaires have made their wealth either through tech or manufacturing.

Four of the Chinese cities on the list also had the biggest billionaire growth in 2020. Each of them gained more than 10 net new billionaires:

  • 🇨🇳 Hangzhou: 21
  • 🇨🇳 Shanghai: 18
  • 🇨🇳 Shenzhen: 24
  • 🇨🇳 Beijing: 33

The only other city to gain more than 10 new billionaires in 2020 was San Francisco with 11.

Now sitting at 698 billionaires, China is coming up on the 724 held by the United States. Beijing overtaking NYC could be the beginning of a larger tipping point.

Shifting Tides

Asia-Pacific’s collective 1,149 billionaires are worth $4.7 trillion, while U.S. billionaires are worth $4.4 trillion in total wealth.

Overall, it looks like the wealth tides may be turning as China continues to progress economically and more billionaires become based in the East over the West.

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