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For every 10% drop in spending in categories affected by COVID-19, overall consumer spending drops 1.7%
One of the biggest concerns about the continued spread of COVID-19 is the impact it will have on consumer spending, which accounts for about 70 percent of the entire US economy. In the chart above, we show the 12 consumption categories most affected by COVID-19, as well as the share of overall consumer spending each category represents. Together, these categories account for about 17 percent of total consumption. For every 10 percent drop in spending in these categories over a three-month period, overall consumer spending will drop by 1.7 percent. Hence, for an economy that typically grows by about 0.5 percent per quarter, even a conservative estimate like a 10 or 20 percent contraction in these 12 categories will cause a significant contraction in economic activity for the next few months.
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