Nearly 90% of Americans Expect Recession Because of COVID-19

BOSTON and CHICAGO, March 25, 2020 /PRNewswire/ -- Between 80% and 90% of American consumers said they expect a recession within the year in light of COVID-19, and 89% believe their geographic area is affected by the outbreak, according to a survey of 2,608 American consumers fielded on March 18, 2020.

The survey by L.E.K. Consulting, a global management consulting firm, and Civis Analytics, a data science firm, is representative of the general U.S. population and designed to shed light on how consumers' habits, spending and sentiments are being affected by COVID-19.

The findings portray the dramatic prospective effect on travel. The nearly 89% of Americans who said they're being affected by the COVID-19 situation have already canceled or ruled out between 50% and 75% of their 2020 travel spending. Even those few who said their area isn't affected are dropping their 2020 travel spend by more than a third (37%). Travel spend includes airlines, hotels, rental cars, cruises and so on.

"COVID-19 is, of course, first and foremost a human and social crisis. Since businesses play such critical roles in employing, supplying and responding to individuals and society, we think it's important to contribute insights on what consumers are thinking, how their spending is changing and how they can be better served," said Manny Picciola, Managing Director at L.E.K. Consulting. "While the true net effect of the outbreak is impossible to determine at this point, we believe moment-in-time snapshots are helpful, and we will endeavor to provide those."

"We are in truly unprecedented times, with a level of uncertainty that many of us have never experienced," said Ellen Houston, Managing Director of Applied Data Science at Civis Analytics. "Data can help us regain at least some control, allowing us to understand not only where people's heads are at right now, but eventually predict where people's heads will be – meaning businesses can make better informed decisions about the future." 

Americans said the effect on non-travel spending is more muted. Most people said they are spending about 4% to 6% less than they would if it were not for COVID-19. Interestingly, people who believe the severity of COVID-19 is most critical (18% of the population) are spending significantly – 17% – more. That jump probably relates to stockpiling, and the others' dip may relate in part to restrictions on leaving home.

While it's not surprising that consumers said they're pulling back 40% to 50% on such expenditures as dining out, outside-home entertainment and outside home fitness, it's notable that consumers reported significant drops in other, less "go outside" items and services:

• Consumer electronics – down 25% to 30%.
• Takeout/delivery – down 10% to 15%.
• Beauty – down 5% to 10%.

Some Notable Spending Increases

At the same time, Americans said their monthly spend is increasing markedly in certain areas:

• At-home fitness – up 35% to 40%.
• Medicine and medical supplies – up 20% to 25%.
• At-home entertainment – up 15% to 20%.
• Groceries – up 15% to 20%.
• Pet supplies – up 10% to 15%.

And consumers said they anticipate their online grocery spend to reach 40% of their total grocery spend if the outbreak worsens, and that their online non-grocery spend will reach 45%.

"As restrictions and social norms evolve in response to COVID-19, consumers are of course adjusting their broader behaviors, reporting to us more 'at-home' activities like cooking, watching TV, social media browsing and exercising at home. These changes create a need for brands to explore how they can meet consumers where they are and engage with them in novel ways, like live digital fitness classes," said Maria Steingoltz, Managing Director at L.E.K. Consulting.

Methodology
Survey was fielded online between March 18-20, 2020. Responses from 2,608 U.S. adults were weighted to be representative of the U.S. adult population. L.E.K. and Civis plan to conduct surveys at regular intervals during the COVID-19 crisis.

About L.E.K. Consulting
L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries — including the largest private and public-sector organizations, private equity firms, and emerging entrepreneurial businesses. Founded in 1983, L.E.K. employs more than 1,600 professionals across the Americas, Asia-Pacific and Europe. For more information, go to www.lek.com.

About Civis Analytics
Civis Analytics helps leading public and private sector organizations use data to gain a competitive advantage in how they identify, attract, and engage people. With a blend of proprietary data, technology and advisory services, and an interdisciplinary team of data scientists, developers, and survey science experts, Civis helps organizations stop guessing and start using statistical proof to guide decisions. Learn more about Civis at www.civisanalytics.com.

Contact:
Michael-Jon Romano
Sommerfield Communications
+1 (212) 255-8386
[email protected]

SOURCE L.E.K. Consulting

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