What Can Consumer Spending Stats Tell Us About the UK Recovery In September 2020

Brett Alegre-Wood
September 23, 2020

Consumer spending is still well below typical levels

UK consumer spending is still below normal. Unless you own a home improvement centre. There are restrictions in spending. London and other major cities are taking long to recover.

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Consumer spending is still well below typical. Now we've got the zero line there okay so the zero line is through the middle anything above the zero line means that it's better than last year anything below means that it's worse. Now obviously March, April, May, June you know and even July are much worse. But things have come back. I mean you can see the airlines there minus 80 you know minus 60 still minus 50 still you know but interesting if you've got a nursery or home and garden you're you're quite laughing because obviously being at home people go you know what we want to renovate the house. We want to do the house and you know I've had a number of people who have gone after that and you know and gone for that which is great news.

So I think the key really here is with the government spending is things aren't as good as they were, you know we are in a recession. But I think part of this is people are starting to go you know what I don't need to spend all my money on all this other stuff. So there's been a restriction of the spending but there's also been a realisation of the consumeristic society and I know I have this conversation with lots of people you know about how they've stopped spending on certain stuff. But then the other side is there's still people that are now buying online. I mean Amazon grew the equivalent what they thought they growing 10 years they grew in four months they reckon you know and that's why you know he's a bazillionaire. You know it's just yeah incredible because deliveries you know that sort of thing.

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So people are still spending but they're not spending the rate they were, which that's to be expected so I wouldn't be too worried about the consumer spending right now. But what it does mean is we're not going to bounce back massively you know so if we're talking about a V-shape right now I'm not sure we've got the V-shape back yet. 

You know people are taking longer to return to high streets you know in London and other larger cities than smaller towns now. This is one of the keys so I thought this if you go through a walk through London now what happens you know it's not as busy as it was. However, if you look at some of the smaller towns people are returning to the small towns. I mean it's interesting you know I'm in Singapore at the moment and what we're finding is a lot of the little cafes now are actually bustling you know they're as busy, busier than they ever were partially because people are working home still and so they want to get out so they go out for their morning coffee or they go out with their laptop and do some work in the coffee shop.

You know so those sort of smaller places are benefiting but if you're not going into the city to work you know and let's face it there's 8 million people in London 5 million people live in London and 3 million people travel in each day. So if those three million people aren't coming in or a portion were gone that's a big hit to the economy and that's what's happening with the major cities.

So again this is not it's not that people are just staying home and not spending you know but they are taking their London and the major cities are taking longer to come back and to recover. Okay now that will mean lots of businesses that will mean lots of jobs that will mean all that sort of things so I'm not suggesting for a moment that things are just gonna you know tick back up and everything's gonna be great and we can put all coronavirus behind us. i don't think that's the case okay but i also for the UK don't think that we're necessarily in for this massive massive you know thing unless America does a total nosedive everyone decides the u.s dollar is not that china decides to jump all the dump all the us dollars on the market unless and these are all worst case scenarios and what I tend to find is when i'm doing predictions and things worst case scenario generally doesn't happen. Very rarely to get one worst case scenario maybe to get two, three, four, five you know which might cause a drop of 30 percent in house prices or whatever i just don't see that as happening.

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In this circumstance I think the government is willing to do what it needs to do it certainly said that and it's backed it up so this is an interesting graph because this is you know if we have a look some sectors have seen their operations resume others are largely still shut so the interesting if you look at all sectors you've got the turnover down which you'd expect okay you've got on furlough now furloughs start to drop off because it's starting to cost money so people are coming back temporarily closed you know the little red line is those made redundant so as long as that redundancy doesn't jump up massively we're probably going to be okay.

All right you can have a look at some of those things I mean look at hospitality you know that's a you know that's a big hit and an early hit but they were shut down totally you know you've got things like professional scientific haven't really been touched you know i mean you've got retail has been manufacturing you know but a lot of these if you look construction, manufacturing, retail they haven't yet recovered okay if anything health, IT you know have plotted it along because they haven't been affected too much by it you know admin and support you know there's been redundancies made you know. So a lot of this sort of stuff is happening but these are just you know none of these are really, they're what you would expect they're not actually oh this is tragic and this is you know gonna you know turn to crap.

Video Transcription

Consumer spending is still well below typical. Now we've got the zero line there okay so the zero line is through the middle anything above the zero line means that it's better than last year anything below means that it's worse. Now obviously March, April, May, June you know and even July are much worse. But things have come back. I mean you can see the airlines there minus 80 you know minus 60 still minus 50 still you know but interesting if you've got a nursery or home and garden you're you're quite laughing because obviously being at home people go you know what we want to renovate the house. We want to do the house and you know I've had a number of people who have gone after that and you know and gone for that which is great news. So I think the key really here is with the government spending is things aren't as good as they were, you know we are in a recession. But I think part of this is people are starting to go you know what I don't need to spend all my money on all this other stuff. So there's been a restriction of the spending but there's also been a realisation of the consumeristic society and I know I have this conversation with lots of people you know about how they've stopped spending on certain stuff. But then the other side is there's still people that are now buying online. I mean Amazon grew the equivalent what they thought they growing 10 years they grew in four months they reckon you know and that's why you know he's a bazillionaire. You know it's just yeah incredible because deliveries you know that sort of thing. So people are still spending but they're not spending the rate they were, which that's to be expected so I wouldn't be too worried about the consumer spending right now. But what it does mean is we're not going to bounce back massively you know so if we're talking about a V-shape right now I'm not sure we've got the V-shape back yet. You know people are taking longer to return to high streets you know in London and other larger cities than smaller towns now. This is one of the keys so I thought this if you go through a walk through London now what happens you know it's not as busy as it was. However, if you look at some of the smaller towns people are returning to the small towns. I mean it's interesting you know I'm in Singapore at the moment and what we're finding is a lot of the little cafes now are actually bustling you know they're as busy, busier than they ever were partially because people are working home still and so they want to get out so they go out for their morning coffee or they go out with their laptop and do some work in the coffee shop. You know so those sort of smaller places are benefiting but if you're not going into the city to work you know and let's face it there's 8 million people in London 5 million people live in London and 3 million people travel in each day. So if those three million people aren't coming in or a portion were gone that's a big hit to the economy and that's what's happening with the major cities. So again this is not it's not that people are just staying home and not spending you know but they are taking their London and the major cities are taking longer to come back and to recover. Okay now that will mean lots of businesses that will mean lots of jobs that will mean all that sort of things so I'm not suggesting for a moment that things are just gonna you know tick back up and everything's gonna be great and we can put all coronavirus behind us. i don't think that's the case okay but i also for the UK don't think that we're necessarily in for this massive massive you know thing unless America does a total nosedive everyone decides the u.s dollar is not that china decides to jump all the dump all the us dollars on the market unless and these are all worst case scenarios and what I tend to find is when i'm doing predictions and things worst case scenario generally doesn't happen. Very rarely to get one worst case scenario maybe to get two, three, four, five you know which might cause a drop of 30 percent in house prices or whatever i just don't see that as happening. In this circumstance I think the government is willing to do what it needs to do it certainly said that and it's backed it up so this is an interesting graph because this is you know if we have a look some sectors have seen their operations resume others are largely still shut so the interesting if you look at all sectors you've got the turnover down which you'd expect okay you've got on furlough now furloughs start to drop off because it's starting to cost money so people are coming back temporarily closed you know the little red line is those made redundant so as long as that redundancy doesn't jump up massively we're probably going to be okay. All right you can have a look at some of those things I mean look at hospitality you know that's a you know that's a big hit and an early hit but they were shut down totally you know you've got things like professional scientific haven't really been touched you know i mean you've got retail has been manufacturing you know but a lot of these if you look construction, manufacturing, retail they haven't yet recovered okay if anything health, IT you know have plotted it along because they haven't been affected too much by it you know admin and support you know there's been redundancies made you know. So a lot of this sort of stuff is happening but these are just you know none of these are really, they're what you would expect they're not actually oh this is tragic and this is you know gonna you know turn to crap.


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