American consumers are showing little sign of returning yet to their normal balance of spending on services over goods, with a heavy reliance on imported products, according to two indicators based on shipping data.
Flexport Inc.’s Post-Covid Indicator shows a reading of 123 for December, up from 122 in November and the 11th straight month above 100 — the baseline set in mid-2020 to show how consumer spending patterns shifted after the initial coronavirus outbreaks and lockdowns.
For six decades before the pandemic, U.S. household spending on goods declined proportionately as Americans spent more on services. That trend flipped last year amid lockdowns and travel restrictions.
The Flexport index aims to pinpoint the return to pre-pandemic consumer behavior. It anticipates the goods-and-services shares of U.S. personal consumption expenditures as released by the Bureau of Economic Analysis, and also factors in data from the company’s shipper customers. Goods’ share of PCE averaged about 31% for four years preceding the COVID-19 pandemic, climbing to an average of 34% from June to October 2020.
Conventional wisdom holds that as the pandemic subsides, people will shift back to their usual amount of spending on services like leisure travel and restaurants, relieving pressure on strained global supply chains. Until that happens, the current demand patterns are “likely to leave spending on goods versus services well above pre-pandemic levels, contributing to continued logistics network congestion,” Flexport said on Wednesday.
Separately, the San Francisco-based company said its Trade Activity Forecast calls for growth of U.S. merchandise imports of 15% in the fourth quarter compared with a year earlier. “Looking further ahead, a slowdown in January and February linked to normal seasonality and the Lunar New Year holiday is expected to be followed by a renewed expansion in demand,” it said.
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