“The drop in consumption we are recording does not respect the typical model of crises due to an income shock”. Fedele De Novellis, head of the macro-economic forecasting and analysis working group of Ref Ricerche, is convinced of this. “There is a collapse in rationed spending due to administrative restrictions, but the impact of the crisis is less on purchases of goods.”
Is the current consumption trend therefore unprecedented?
This time the crisis affects services: tourism, culture and catering, transport. There has been an administrative rationing of demand, due to restrictions from Covid-19. There has also been a decline in the consumption of goods, but in many sectors the gap has been filled by online commerce and by the rebound recorded at the reopening of stores. The industry is in fact recovering, food has held up, the consumption of electronics and even pharmaceutical goods has increased. Only clothing has suffered a severe blow, due to the change in lifestyles between smart working and distance learning that has made the renewal of the wardrobe less necessary.
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So, once the restrictions to limit infections are overcome, will the contraction in consumption in services also be overcome?
These sectors are experiencing an unprecedented crisis, also because this type of spending was usually the prerogative of the wealthiest families, starting with tourism spending. These are sectors that were not prepared and the support instruments, in particular the layoffs, are mostly designed for the industry, already hit in the past by strong periods of discontinuity in demand. In services, on the other hand, contracts are more precarious and the fall into unemployment is physiological. The recovery, therefore, rests on very different situations and remains linked to the progress of the vaccination campaign. Tourism, being seasonal, could hold up substantially if summer is like last year. While for cinemas and theaters, if all goes well, the effects of the reopening will not be seen before October.
In the coming months, however, could the economic crisis hit families and the spectrum of unemployment be reflected in consumption?
Politics reacted by trying to counter this dynamic with measures never adopted in history to limit the recessive effects on household budgets. In this situation, in fact, the collapse of profits and household incomes was more contained: purchasing power fell by 2.6% while consumption recorded a decline of 12%. And in the meantime, amid the general uncertainty, savings have increased considerably: deposits have grown by about 8 billion a month. Obviously, within these averages there are the most diverse family situations. But we expect that, once the restrictions are lifted, consumption can restart and the government can begin to curb aid.
Will consumption return to the previous levels?
It’s not for sure. We do not know what the families have internalized and if there will be a full recovery of the demand. Some hypothesize a post-war effect, a deadly boom in the recovery of consumption. Others say there will remain greater propensity to put aside savings, many of which will end up in real estate, as long as you can take advantage of such low rates. We also don’t know how the pandemic has changed our lifestyles in the long run. The structure of the demand may be different: commercial activities in the areas close to the offices or the shops in the center could continue to suffer, while perhaps more shops in the suburbs, in residential districts, will open.