Toilet paper sales shot way up last year — 845% by some estimates — making it the most purchased item at grocery stores across the country.
There’s nothing wrong with being prepared. But the unprecedented frenzy of toilet paper buying unleashed by fears of the novel coronavirus says a lot about our priorities — and how dramatically they changed in 2020.
It was a weird year in many ways, and consumer spending was no exception.
For the most part, we cut back spending on things that have always defined normal everyday life like clothing, shoes, restaurants and transportation because we didn’t go out as much. Cosmetic sales also took a hit as staying in and working from home became the new normal. Makeup sales were down 36% in 2020. On the other hand, sales of hair coloring products spiked 46% when salon closures forced women who had never colored their own hair to learn the skill.
Many gym memberships got eliminated from household budgets out of fear that all the huffing and puffing in close proximity isn’t safe. Demand for at-home exercise equipment shot through the roof, and so did the stock price for Peloton Interactive Inc., which rose from $26 in February to $160 in December.
People fortunate enough to keep a job during the pandemic stashed record amounts of cash in the bank, according to federal government data.
But even those who had extra cash didn’t have as many places to spend it.
The Benedum, Heinz Hall and other Downtown performance venues went dark in the spring and stayed that way all year. Movie theaters had nothing to offer but old classic films. So we entertained ourselves at home. Video game sales exploded and subscriptions soared for online streaming services like Amazon Prime, Netflix and Hulu. We did a record amount of shopping from home, and internet sales, in general, were higher than ever.
“Spending has changed dramatically,” said Paul Brahim, managing director of Wealth Enhancement Group, Downtown. “I see it in action as a financial adviser. That’s the main thing we do is help clients think about spending.
“The crisis is causing us to think differently,” he said. “People are paying off debt. They are saving cash. They are fixing up their homes and buying things that will make them comfortable in their homes.”
Americans owed more than $1 trillion in credit card debt at the start of 2020, but quickly changed course and posted the biggest debt paydown ever in the first quarter — $60 billion — and a combined $58.8 billion debt paydown in the second and third quarters, according to WalletHub, a Washington, D.C.-based personal finance website.
Budget priorities shifted
In big ways and small, the family budget in 2020 got turned upside down.
Unemployment applications in Pennsylvania hit 2.5 million by December. A staggering 22 million people filed jobless claims across the country.
A study by the Pew Research Center found overall, 1 in 4 adults have struggled to pay their bills since the coronavirus outbreak started. A third have dipped into savings or retirement accounts to make ends meet, and about 1 in 6 have borrowed money from friends or family or gotten food from a food bank.
Moratoriums on evictions and utility shutoffs and a little stimulus money helped keep things from getting worse for those most severely impacted.
But the virus gave people from all walks of life something to worry about. Rich people were anxious about getting their affairs in order, Mr. Brahim said, right down to thinking about tax planning and making sure their estate documents are in order.
“I’ve had more calls about medical powers of attorney and living wills than I have ever in my whole life over the past six to nine months,” he said. “People never want to talk about this stuff. Now they are asking about it and wanting it reviewed.”
On the whole, our spending was directed toward staying safe and being comfortable in our living spaces.
People shut inside their homes spent money repainting interior rooms and fixing little flaws around the house they had always promised to take care of when they had more time. One of the biggest paint companies, Downtown-based PPG Industries, saw its share price shoot up 30% thanks — in part — to all the do-it-yourselfers sprucing up their homes with fresh colors.
They shelled out money to buy new homes, too, while taking advantage of record low interest rates for mortgages. The 30-year mortgage fell to 2.72% in November, the lowest it’s ever been. Prior to that, the record was set in 2016 when the typical 30-year mortgage rate was 3.65%, according to MortgageReports.com.
The housing market was so strong in most communities in Allegheny County that if a home was in good condition and priced right, it could sell within 30 days. The average selling time was 60 days in the city of Pittsburgh and 54 days in Allegheny County in 2019, according to John Petrack at the Realtors Association of Metropolitan Pittsburgh.
And as buyers started preferring having more room to quarantine in, the demand for homes in popular city neighborhoods like Lawrenceville and in the East End started cooling down, while suburban communities such as Mt. Lebanon, Upper St. Clair and Shaler saw a spike in prices and demand.
The Downtown luxury rental market was hit hardest in terms of higher vacancies and falling rents, according to Washington, D.C.-based CoStar Group. The work-from-home economy also led more families living in close quarters to relocate to quieter, less dense communities while seeking larger homes with more yard space.
Meanwhile, money that would normally be spent on child care, eating out for lunch and paying for parking leases has apparently gone to the rainy day fund.
The U.S. personal savings rate — the percentage of people’s income remaining each month after taxes and spending — skyrocketed to a record 32.2% last year, according to the U.S. Bureau of Economic Analysis. Personal savings in the U.S. had averaged 8.93% from 1959 until 2020.
“I’ve heard this from a lot of people I work with: ‘We’re simply not spending any money,’” said J. Victor Conrad, owner of Pinnacle Financial Strategies in Pine.
Even trips to the mall to simply “window shop” have been cut down, he said, due to fears of being outside the house around others.
“Granted, you can certainly impulse buy online fairly easily. In general, at least with the people I work with, spending is down,” Mr. Conrad said.
Less travel, more cooking
Overall, consumer spending was down massively for restaurants, hotels, travel and entertainment last year. Money that had been earmarked for going on cruises or a big destination vacation also ended up getting saved.
“Far and away, the biggest savings for my clients has come from not traveling to Greece and Spain,” said Ashby Daniels, a wealth manager at Shorebridge Wealth Management on Washington’s Landing.
“I had one client who was going to spend $10,000 for a week in Israel,” he said. “Another client was going to take a river cruise down the Danube.”
Other clients have discovered a new love for cooking.
“They’re saving hundreds of dollars per month while in some cases eating better and enjoying the process,” Mr. Daniels said.
The NPD Group, a Port Washington, N.Y., consulting firm, reported 200,000 more bread cookbooks were sold in the U.S. in 2020 than in 2019. The overall increase in print cookbooks of all types was 15% last year.
“Certain expenses are one-year savings and some will be ongoing savings,” Mr. Daniels said. “Preparing meals at home is a savings that will live on for many years to come. People have found a real joy in cooking at home.”
Tim Grant: tgrant@post-gazette.com or 412-263-1591.
First Published: January 11, 2021, 11:00 a.m.
