Pandemic purchases in the US reveal a surprisingly mixed bag
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One of the more striking features of the pandemic is the inequity of the pain it has inflicted. It has disproportionately affected black and Latino communities. More than 16-million Americans are unemployed, nearly triple February’s levels, but investors in the S&P’s 500 Index are back in the green for the year. And while some businesses are looking at a multi-year slump in demand, others are experiencing their best sales growth ever.
The second-quarter earnings season brought fresh evidence of relative bright spots for spending, from the obvious demand for cleaning products to more surprising splurges such as swimming pools and Weight Watchers memberships. That’s a shift from the financial crisis of 2008 and 2009. You would be hard pressed to name large companies that didn’t experience some sort of a slowdown from that particular recession, let alone any that were outright beneficiaries.
There are no real winners in a pandemic that has killed more than 150,000 people in the US, but the willingness of at least some Americans to keep spending on certain categories is a positive indicator and has most likely served to keep the economic downturn from being even worse.
Here’s what stood out.
Big-ticket items
The unique nature of the pandemic, with months spent under lockdown conditions, has some consumers making the kind of large discretionary purchases that are typically the first to get cut in a downturn. New-home sales in the US rose to an almost 13-year high in June, while purchases of existing homes posted the largest ever month-over-month gain as families juggling the work-from-home and virtual-learning experiment seek bigger properties in less urban areas. Much of this home-buying now starts virtually.
That translated to a 12% gain in monthly users on Zillow Group’s sites during the second quarter. Better-than-expected sales growth in its internet and mortgages divisions should push the company’s third-quarter operating profit above the threshold it was targeting internally before the pandemic, CFO Allen Parker said on an earnings call last week.
High on the list of priorities for some home shoppers is going to be a parking spot. A wariness of public transportation and ride-sharing has underscored the appeal of individual cars and helped the sector bounce back much more quickly than anticipated.
General Motors (GM) and Ford both reported better-than-expected second-quarter results amid a strong gain in sales once dealerships and plants were allowed to reopen in May and June. ...
The second-quarter earnings season brought fresh evidence of relative bright spots for spending, from the obvious demand for cleaning products to more surprising splurges such as swimming pools and Weight Watchers memberships. That’s a shift from the financial crisis of 2008 and 2009. You would be hard pressed to name large companies that didn’t experience some sort of a slowdown from that particular recession, let alone any that were outright beneficiaries.
There are no real winners in a pandemic that has killed more than 150,000 people in the US, but the willingness of at least some Americans to keep spending on certain categories is a positive indicator and has most likely served to keep the economic downturn from being even worse.
Here’s what stood out.
Big-ticket items
The unique nature of the pandemic, with months spent under lockdown conditions, has some consumers making the kind of large discretionary purchases that are typically the first to get cut in a downturn. New-home sales in the US rose to an almost 13-year high in June, while purchases of existing homes posted the largest ever month-over-month gain as families juggling the work-from-home and virtual-learning experiment seek bigger properties in less urban areas. Much of this home-buying now starts virtually.
That translated to a 12% gain in monthly users on Zillow Group’s sites during the second quarter. Better-than-expected sales growth in its internet and mortgages divisions should push the company’s third-quarter operating profit above the threshold it was targeting internally before the pandemic, CFO Allen Parker said on an earnings call last week.
High on the list of priorities for some home shoppers is going to be a parking spot. A wariness of public transportation and ride-sharing has underscored the appeal of individual cars and helped the sector bounce back much more quickly than anticipated.
General Motors (GM) and Ford both reported better-than-expected second-quarter results amid a strong gain in sales once dealerships and plants were allowed to reopen in May and June. ...
