Changes in Consumption in the Early COVID-19 Era: Zip-Code Level Evidence from the U.S.
Journal of Risk and Financial Management, Forthcoming
32 Pages Posted: 4 Aug 2020 Last revised: 6 Oct 2021
Date Written: October 6, 2021
Using monthly zip-code level data on credit card transactions covering 16 U.S. cities, this paper investigates changes in consumption at local commercial places during the coronavirus disease 2019 (COVID-19). Since using aggregate-level data can suppress valuable information on consumption patterns coming from zip codes, the main contribution is achieved by estimating common factors across zip codes that are controlled for factors that are zip-code and time specific as well as those that are zip-code and sector specific. Whereas raw data for the median zip code suggest that spending on all sectors (except for grocery) has decreased amid COVID-19, the estimation results based on common factors across zip codes rather show that relative consumption of products and services that can be consumed at home (e.g., grocery, pharmacy, home maintenance) has increased up to 56% amid COVID-19 compared to the previous year, whereas relative consumption of products and services that cannot be consumed at home (e.g., fuel, transportation, personal care services, restaurant) has decreased up to 51%. Similarly, after controlling for the corresponding factors, online shopping has relatively increased up to 21%, while its expenditure share has relatively increased by up to 16% compared to the pre-COVID-19 period.
Keywords: COVID-19, Coronavirus, Consumption, Sectors, Online Shopping
JEL Classification: E20, R10
Suggested Citation: Suggested Citation