THE IMPACT OF A SECOND ROUND OF STIMULUS ON THE CPG DEMAND CURVE - COVID-19 Emerging Point of View - IRi
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COVID-19 Emerging Point of View THE IMPACT OF A SECOND ROUND OF STIMULUS ON THE CPG DEMAND CURVE July 30, 2020
Executive Summary IMPACT OF SECOOND STIMULUS
In March 2020, the $2.2 trillion CHECK ON CPG DEMAND
Coronavirus Aid, Relief, and • Consumers are likely to spend most of the
stimulus check on essentials (e.g., rent,
Economic Security Act (CARES Act) utilities) or discretionary categories (e.g.,
stimulus bill was passed, and electronics, home amenities etc.) or savings /
included $1,200 per adult whose investments
income was less than $99,000, as • About a third of consumers (mostly lower
income) will use the extra money to buy
well as an extra $600 per week on groceries; value channels are likely to benefit
top of states’ unemployment
benefits; that benefit is scheduled EFFECT OF REDUCED
to end July 31. Congress in May UNEMPLOYMENT BENEFITS
approved a $3 trillion stimulus As benefits are reduced, recessionary spending
package, the Heroes Act, to extend behaviors are likely to take hold: lower income
economic support through January shoppers will stick to the basics; middle income
shoppers will revert to lower-income behavior;
31, 2021. The Senate is currently highest earners may catch the “fear fever” and
negotiating a separate $1 trillion save, rather than spend.
package, the HEALS Act. In this • Discretionary spending would suffer
report, we anticipate likely impact • Shoppers will seek value in economically
of the second stimulus check and valuable, larger pack sizes, as well as smaller
pack sizes required by tight budgets
reduced unemployment benefits • Price / value perceptions will matter even more
on the CPG Demand Curve. in choice of brands and retailers
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2
What Happens July 31st?
The $2.2 trillion CARES Act, which included a one-time check to individuals earning less than
$99,000, an additional weekly unemployment benefit of $600, as well as hundreds of billions of
dollars in forgivable small business loans worked to bolster an economy hit by shuttered
businesses and massive unemployment, all fallout of the deadly coronavirus. Intended to carry
consumers and the economy through the pandemic, these benefits are set to expire July 31.
With dramatically increasing cases of COVID-19 and 18 straight weeks of more than 1 million
individuals applying for unemployment benefits, it’s clear that support beyond July is needed.
Who is impacted?
• 51.3MM Americans have filed for unemployment due to COVID-19.**
• 25MM people currently receive the $600 unemployment booster check each week.*
• The eviction moratorium for those living in federally backed mortgages or receiving
government assisted housing expires on July 25 (with some extensions to August 31),
impacting 40MM.*
Two-Thirds of Americans Say They Need Additional Stimulus Support
• Job losses among low-wage workers represent 56% of total unemployment.**
• About 61% of middle-income Americans have cut spending in the wake of the pandemic.**
• About 78% of U.S. workers are living paycheck to paycheck.*
• More than a quarter of U.S. households missed last month’s rent or mortgage payment and
there is a lack confidence in the ability to pay next month.
Source: *CNBC; **USA Today
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 3
More Than Half of Consumers Fear Losing Their
Job; 35% Fear Loss of Employment Income
Household Pulse Survey – Total U.S.
51.1%
47.0%
38.8%
35.2%
Loss in Employment Income Expected Loss in Employment Income
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12
April 23 July 23
Source: U.S. Census Bureau; % of adults in households where someone had a loss in employment income since March 13, 2020
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 4
More Than a Quarter of U.S. Households Missed Last Month’s Rent or
Mortgage Payment; There is a Lack of Confidence in Ability to Pay Next Month
United States Housing Scarcity by Week
50 26.4 26.5 27
MILLIONS
45 25.9
25.4 26
25.3
40
24.6 24.7 24.5 25
35
23.6 23.7 24
30 23.2
25 23
22.1
20 22
15
21
10
5 20
0 19
1 2 3 4 5 6 7 8 9 10 11 12
April 23 WEEKS July 23
Measure Definition: % of adults who missed last month’s rent or mortgage payment, or who have slight or no confidence that their household can pay next month’s rent or mortgage on time / Timeframe: April 23 – July 23, 2020
Source: https://www.census.gov/data-tools/demo/hhp/#/
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 5
A Second Stimulus Check is on the Table; the First Check Was
Saved, Used for Rent / Mortgage and Spent on Groceries
$2.2 trillion CARES Act: Sales took off in mid-April when many Americans began to receive their $1,200
stimulus checks. Within 10 days of receiving their stimulus checks, households spent around one quarter to
one third of it, research shows, including rent, bills, food, personal care and nondurables.
Uses of Stimulus Payment
4/3 - 4/5 4/10 - 4/12 4/17 - 4/19 4/24 - 4/26 5/1 - 5/3
48%48%
41% 43% 44%
41% 42% 40% 40%
38% 35% 34%
34%
32% 30%
18%
16% 17%
16%
11% 12%
10%
13%
9% 9% 8%
7%6%7% 5% 5%5%5%
5% 3%
2%1%1%1%1%
To Pay Rent, To Add to My To Buy More To Pay To Buy Furniture, To Buy To Pay for Child Other
Mortgage, Taxes Savings or Groceries and Healthcare Appliances or Clothing Care or a
or Utilities Investment Other Everyday Bills Electronics Caregiver for
Accounts HH Essentials an Adult
Source: MarketWatch, IRI Consumer Network™ Panel Survey representing Total U.S. Primary Grocery Shoppers, base ~1,200 adults aged 18+
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 6
Stimulus Spending Shifts Based on Household Income; Lowest Income
Households Focused on Necessities of Food, Utilities, Household Supplies
Percentage of Recipients Allocating Economic Impact Payment Toward Specific Expenses,
Among Those Who Used the Stimulus to Mostly Pay Expenses, by Household Income
Note: Population weights applied. This figure represents adults over the age of 18 who responded to the income and economic impact payment questions.
Source: American Enterprise Institute Analysis of U.S. Census Bureau. “Week 8 HH Pulse Survey: June 18-23, July 1, 2020
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 7
Tracking the Stimulus Spend
IRI’s weekly consumer surveys reveal the majority According to the
of stimulus money went to housing expenses, National Bureau of
savings and grocery bills. Retailers experienced Economic Research,
an upsurge in sales of discretionary categories, households spent
including electronics, clothes and toys. about $0.25 - $0.35
more for each stimulus
Retailers Reporting Increases dollar in the first
10 days after they
TVs, electronics, gaming equipment, received the payment.
sporting goods, apparel, bicycles
Researchers found that
TVs, electronics, gaming equipment, consumers spent more
apparel and cosmetics
than 40% of the money
from the checks after
a week or two.
TVs TVs Uptick in ALL
Electronics Electronics Products
Sewing Machines
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As Unemployment Benefits Decrease, Recessionary Behaviors Will Increase
Shopping Behaviors of Past Recessions
Spend Less on
Spend Less on Personal Buy Smaller Buy at Lower Buy at Value
Eating Out Services, e.g., Amounts Prices Channels
Hair, Nails
Buy Fewer Purchase More Shopped
Buy More DIY Nail Care Retailers That
Affordable Treats Individual- Private Label
Sales Increase Serving Packages Products Offer
More Value
Fewer Prepared Buy Smaller Stock Up at
Meals, More Home Hair Color Amounts of Plan Trip to Stick the Beginning
Scratch Cooking Sales Increase Favorite Treats To List / Budget of the Month
Cut Back on Use More Buy Less at
Non-Essential Coupons; Look Convenience
Groceries for Deals Stores
CLICK HERE for More on Recessionary Behaviors with IRI’s “Recession Proof Your Business” Series
Source: IRI analysis
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 9
Comparing House’s Heroes Act and Senate’s HEALS Act vs. CARES Act
CARES Act HEROES Act HEALS Act
Stimulus Package Cost $2.2 trillion $3 trillion $1 trillion
Stimulus Check $1,200 to single filers earning under $75k per Same as CARES Same as CARES
Maximum Payment year, $2,400 for joint filers under $125k
Stimulus Money $1,200 for dependents, maximum of three $500 for all dependents, no age limit
$500 for all dependents 16 and under
Received for Dependents Initially $200 per week, then up to $500
Enhanced Unemployment $600 per week plus state benefits Same as CARES per week to match 70% of lost wages
Benefit when added to state benefits
Enhanced Unemployment January 2021 for most workers $200 per week bonus through September, then
Expires July 31 70% matching of lost wages; expires 12/31/20
Duration
$659B in forgivable loans for small businesses, Expands eligibility, eliminates 75% payroll $190B into the PPP fund; allows businesses to
Paycheck Protection who must use 75% on payroll to be eligible for requirement and extends application request a second loan; expands approved
Program forgiveness; expires 8/8/20 period to 12/31/20 use of funds for loan forgiveness
Increases tax credit to 80% of up to Increases tax credit to 65% of up to $30,000
Employee Tax Credit Tax credit on 50% of up to $10,000 in wages $15,000 in wages
Eviction Protection and Bans late fees until 7/25, evictions until 8/24 on Expands to cover rent, extends eviction Does not address
Moratorium properties backed by federal mortgage programs moratorium, allocates $200B for housing programs
$70B to K-12 that open for in-person classes,
School Reopening Does not address $58B for grades K-12, $42B for higher education. $29B for higher education, $1B to Bureau of
Indian Education, $5B state discretion
Liability Protection from 5 year liability shield to prevent schools,
Does not address Does not address businesses, hospitals, from being sued over
Coronavirus Illness
coronavirus related issues
Coronavirus Testing Does not address $75 billion $16 billion
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 10Insights and Strategic
Guidance for Better Decisions
IRI’s Online Resources Include Real-Time
Updates and Weekly Reports That Track
the Impact of the Virus on CPG and Retail
The IRI COVID-19 lmpact
Includes COVID-19 impact analyses, dashboards
and the latest thought leadership on supply chain,
consumer behavior and channel shifts for the U.S.
AND international markets.
IRI CPG Economic Indicators, Including
the IRI CPG Demand Index™, IRI CPG
Supply Index™ and IRI CPG Inflation
Tracker™
Accessible through the insights portal
to track the daily impact of COVID-19.
This includes top-selling and out-of-stock
categories across the country and
consumer sentiment on social media.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 11NOW INCLUDES
IRI CPG Demand Index™
U.S., UK, FRANCE, ITALY,
GERMANY & NETHERLANDS
The IRI CPG Demand Index™ provides a
standard metric for tracking changes in spending
on consumer packaged goods. It measures
weekly changes in consumer purchases, by
dollar sales, against the year-ago period across
departments, including fixed and random weight
products, grocery aisles and retail formats. The
IRI CPG Demand Index™ is available for eight
U.S. regions, all U.S. states, UK, France, Italy,
Germany and the Netherlands.
CLICK HERE FOR MORE!
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 12The Latest COVID-19 Reports and Insights from IRI (click to see full report)
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