Consumers in the U.S. showed minor signs of returning to their usual habits of spending more on services than goods as two shipping data indicators show heavy dependency on imports of goods.
As per Bloomberg news, Flexport Inc. shows a slight uptick to 123 for December compared to 122 in November. They are 11 straight months where the reading remained above the baseline 100 set in November 2020. The benchmark was set to see how consumer spending patterns shifted during the covid-19 pandemic and lockdown periods.
U.S. household goods consumption declined proportionately for a record six decades as Americans spent more on services than goods. This trend was reversed in 2020 during the lockdown and restrictions on travel.
The Flexport index is a yardstick to point towards the return to pre-pandemic behavior of the consumer. It looks at the services and goods share of personal consumption expenditure (PCE) in the U.S. from the Bureau of Economic Analysis release of data. This data also factors in Flexports customers’ shipping data. The share of goods in the PCE data went up to34% during June 2020- October 2020, up from 31 % in the Pre Covid days.
Positive goods trend
The post-Covid indictor from Flexport shows goods purchases staying strong. However, conventional wisdom expects Consumers to go back to their regular spending on services like restaurants and leisure travels and reduce pressure on the strained supply chain globally. Till that happens, the demand for goods versus service will remain and continue to congest the logistics network, according to the Flexport Statement on Wednesday.
The San Francisco-based freight forwarding company separately said that the Trade Activity Forecast sees a 15% growth in goods imports for the last quarter compared to the previous year. The company said that the New year holiday and normal seasonality would slow down in January and February, after which the demand will be renewed again.
