Eurozone | Pay attention to the nuances in the consumer recovery

Once the pandemic is controlled via vaccination programmes, allowing the current restrictions to be relaxed, we expect consumers will respond with a strong spending bounce-back. But we think the headline numbers are also likely to obscure some important nuances in consumption dynamics.

What you will learn from this report:

  • Consumer survey data and our modelling show that consumers will be relatively quick to normalise their consumption patterns and reduce their savings rates, which soared in 2020 as lockdowns shut off spending opportunities. But an upside risk to our forecast is that consumption trends even higher if households delve into the excess savings accumulated during lockdowns.
  • Evidence suggests most excess savings were forced by Covid restrictions and health fears rather than triggered by precautionary motives. This tallies with our expectation that the normalisation of saving patterns will be quick.
  • But excess savings are held mainly by wealthier households. And while we think this group will be more willing to spend, their consumption habits are tilted to big-ticket durables and services, which cannot be consumed in one go. This means unwinding the stockpiles of savings quickly could prove difficult.

Topics: Europe, Eurozone, Markets, Consumer spending, Consumption, Consumer, Recovery

Eurozone Pay attention to the nuances in the consumer recovery