As a result of the corona crisis, a significant proportion of households has reduced their consumption either some or significantly. However, according to a FCCA survey, a majority of consumers estimated that, in many respects, their spending six months after the restrictions are lifted would be at least at the same level as before the epidemic. Even if the consumption level of individuals would be restored after the crisis, it would still not be sufficient to compensate for the gap in total consumption caused by the restrictions.
The FCCA has investigated into the effects of coronavirus on people’s everyday experiences, consumption, income and economic outlook. A total of 2,498 people representing the Finnish adult population responded to an online survey conducted by Taloustutkimus, a Finnish market research company, between 9 and 13 April 2020.
The restrictions and recommendations related to the corona crisis have already had a significant impact on household spending. A half of the respondents have either reduced their consumption or postponed their purchases to a later point, or both. The change is most pronounced in households whose income has decreased. Money is spent less than before, especially on such services that are subject to restrictions, i.e., leisure activities, restaurants and cafés In addition to the restrictions, consumption is reduced by the fact that in about one in five households, income had already decreased or will soon be reduced due to redundancies, lay-offs or unpaid leave, for example.
The level of consumption will be normalised, but the crisis will leave a permanent mark
Based on the survey, it is expected that the consumption of several commodities affected by the crisis will increase both immediately after the lifting of the restrictions and also at six months following the lifting. Although around 60% of consumers have estimated that they spend currently less money on restaurants and cafés, 40% estimate that they will spend more on them as soon as restrictions have been lifted. In other words, the pent-up demand built up during the restrictions would be freed soon after the situation has normalised. A majority of consumers also estimate that they will use the commodities in question at least as much as before the epidemic at six months after the lifting of the restrictions.
On the other hand, since the restrictions entered into force, many consumers have increased the amount of money that they spent on grocery items. However, consumption is expected to return to its original level after the restrictions have been lifted.
The negative impact of the corona crisis on consumption is already extremely significant, but the survey also indicates that at least at the moment, some corrective action can be expected to take place after the restrictions have been lifted. Consumption may return to its previous level and the implementation of postponed consumption decisions may even increase demand, but the losses incurred during the restrictions will not be fully compensated.
The FCCA survey indicates how consumers assess the situation in the light of their current economic and health situation based on their expectations about future developments. At the time of the survey, the loss of income caused by unemployment is not yet very extensive, but as the crisis prolongs, it may worsen and also have a significant impact on household consumption and consumption prospects. Therefore, the report should be repeated If the restrictions will continue for a longer time.
A summary of the results of the consumer survey (in Finnish)
A survey conducted by the FCCA on the impacts of the corona crisis on households (in Finnish)
More information: Tuulia Hakola-Uusitalo, Head of Research, +358 29 505 3011 ja tutkimusprofessori Mika Maliranta, tel. +358 29 505 3060, firstname.lastname@kkv.fi