How The Pandemic Has Changed The Way Americans Spend Money
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Wealthy Americans aren't wining, dining or travelling the way they did before the coronavirus struck, and that is likely going to be a drag on the nation's economic recovery. New research shows wealthy families have cut their spending sharply, even as spending by those at the bottom of the income ladder has bounced back. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: The restaurant where Allison Jackson waited tables in Kokomo, Ind., reopened last month, but she hasn't gone back to work yet. She and her husband have been getting by on unemployment and the money from his part-time job.
ALLISON JACKSON: I'm pretty good at budgeting, so I just watch my bank account and our spending every single day.
HORSLEY: The couple recently bought a mobile home, so they don't have to worry about rent. They also got $2,900 in pandemic relief, which helps to pay for groceries and supplies for their 2-year-old.
JACKSON: The stimulus package helped. We were a little bit behind on our car payment and a few other things, so we were able to just pay that and get caught up completely.
HORSLEY: Jackson says her overall spending is about what it was before the pandemic, but not so for Richard Salmon, who lives in Atlanta and works in corporate finance.
RICHARD SALMON: A weekend pre-pandemic would be some kind of outing - maybe a bar, maybe a restaurant, definitely a happy hour with the co-workers to start the weekend. Now, it's essentially a walk in the evening and lots of Netflix.
HORSLEY: Salmon is still drawing his regular salary while working from home. It's concern about the virus that keeps him from going out more. He and his girlfriend canceled a planned trip to the Caribbean in August. Salmon says he misses jumping on an airplane, but it just doesn't feel safe yet.
SALMON: We've actually gotten pretty comfortable in this whole kind of quarantine lifestyle. Our savings are going through the roof.
HORSLEY: Researchers who've been tracking credit card data see a pattern here. Lower-income households who spend much of their money on necessities are buying almost as much now as they were before the pandemic, often with the help of government relief payments. Higher-income households have more discretion, and their spending has not bounced back. Harvard economist Nathan Hendren says wealthier families have especially cut back on restaurants, travel and other in-person services, even where local governments have been aggressive about lifting stay-at-home orders.
NATHAN HENDREN: It really looks like kind of the broader perceptions of how safe it is to go outside are what's driving the reduction in spending as opposed to the precise policies.
HORSLEY: Hendren says businesses in wealthy neighborhoods were more than twice as likely to lay off workers as those in less affluent communities. Nick Kokunus co-owns five restaurants in Chicago, including Alinea, where dinner might set you back $300 a person. For a while, Kokunus was offering carry-out only service and making money. But now he's opened several of the restaurants with limited outdoor seating, and it's gotten tougher.
NICK KOKUNUS: Thirty percent of the seats outdoors on a patio is not going to cut it for most restaurants. I think you're going to see that restaurants will end up re-furloughing people. And whether that takes place in July, August, September, it seems almost inevitable.
HORSLEY: Kokunus also runs an online reservation system that serves thousands of restaurants. He says bookings are up because a lot of people do want to go back out to eat. But he still hears from customers who aren't ready for that. What's really needed, he says, is an aggressive testing and tracing system or some other mechanism to make both diners and servers feel safe.
KOKUNUS: That feels a ways off still - right? - but that's where we need to get as a small business but also as a country so that we can act with confidence.
HORSLEY: Until that happens, high-income families are likely to keep sitting on their cash, and the broader U.S. economy will continue to pay the price.
Scott Horsley, NPR News, Washington.
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