Does Consumer Spending Decrease when COVID-19 Surges?

In this District Data Brief, Cleveland Fed researchers Joel Elvery and Mark Oleson look at the relationship between state-level changes in consumer activity and COVID-19 hospitalization rates to see how consumer activity has responded to the delta surge and to make comparisons with consumer activity during the fall 2020 surge.

“We show that state-level data suggest that, indeed, economic implications from the latest COVID-19 wave have been less than those from the fall 2020 wave,” say the researchers. “While there has been some consumer response to the delta-variant-driven COVID-19 surge, it has been weaker than the response to the fall 2020 COVID-19 surge.”

Key findings:

• States with larger increases in COVID-19 hospitalization rates had larger declines in bar and restaurant spending than other states during both surges. The drop in spending associated with a given increase in hospitalization rate has been smaller during the delta surge than it was during the fall surge.
• During the fall surge, the states that had large increases in hospitalization rates tended to have relatively large declines in overall retail spending, but during the delta surge, there was no relationship between the severity of the surge and the change in overall retail spending.
• In the fall surge, states that experienced larger increases in COVID-19 hospitalization rates also tended to have larger increases in time spent at home. However, during the delta surge, there is essentially no relationship between changes in COVID-19 hospitalization rates and changes in time spent at home.

Read the District Data Brief: Does Spending Slide When COVID-19 Surges?

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.455.4479