September 8, 2020 - 8:00am -- lehman.488@osu.edu

The typical signs of fall are emerging around us, the yellow school buses, the limited county fair, and fall decorations.  While many things have changed this year, one thing has remained the same according to the data - we are still spending money.  The information below came from a co-worker of mine, Emily Marrison in Coshocton County.  I think you’ll find her research interesting.

An email caught my attention this week. It was from Next Gen Personal Finance, an amazing program with the goal of every high school student graduating with at least one course in personal finance. Their question of the day, “What was the percentage increase in e-commerce retail sales in the April - June quarter compared to 2019?”

According to the US Census Bureau, US e-commerce retail sales from the second quarter of 2020 increased by 45 percent, rising to $211.5 billion. This was also a 31.8 percent increase from the first quarter.

According to Federal Reserve Bank of St. Louis (FRED) Economic Data, personal consumption expenditures have made up roughly two-thirds of the GDP since 2001. In a recent Forbes article, Pamela Danziger explained that the true drop in personal consumption was 10.5 percent for the second quarter. There were certainly quite a few reductions in spending categories, but there were also some increases.

Since many people were not driving as much during the second quarter, spending on gasoline decreased by 25 percent. Most consumers also put car purchasing on hold. However, the sales of SUV and light pick-up trucks remained very steady compared to this time last year. We also spent less on luggage and clothing and shoes.

But we definitely did not stop spending money. There is a category economists call “recreational goods and vehicles” that includes all kinds of items. People must have spent some of their usual gas money on this category, as it was the second fastest growing category. This included spending on video, audio, and computing equipment as well as sporting equipment like balls and bats, home exercise equipment, guns, boats, and motorcycles. People also increased spending on tools and equipment for home repairs, outdoor furniture, and gardening equipment. The food and beverage category led the spending increase with many grocery segments reporting over 10 percent increases, led by alcoholic beverages with 12 percent growth.

Some of these numbers may match our experiences - home improvements, outside landscaping, gardening, and/or doing food preservation. Without school lunches or summer daycare, we notice many more grocery purchases than pre-COVID times.

Behavioral finance examines how we as humans make decisions about money- spending, saving, investing, giving, etc. As much as we like to think money decisions are black and white, there is often a lot of gray, because financial decisions can often be driven by emotions rather than logic.

On a webinar this week, a financial planner was talking about how to improve our finances with these 8 steps:

  • Know what you owe.  Our debt (not including the mortgage) should not be more than 15-20% of our net income.
  • Live within our means.  Have a budget, track our spending and know where money goes.
  • Spend less than you earn, save at least 10% of each paycheck.
  • Borrow only what you can afford to pay back.  Be aware of interest rates and extra fees.
  • Recognize the warning signs of financial difficulty, such as not paying off credit cards, or making late payments due to lack of funds.
  • Maintain a good credit rating.  Use the Annual Credit Report.com to see all three credit bureau reports.
  • Check reports often to guard against identity theft. 

Emily’s closing quote was, from William A. Ward, “Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.”

Check out our website wayne.osu.edu for upcoming financial educational classes, and feel free to call if you have individual questions.

Melinda Hill is an OSU Extension Family & Consumer Sciences Educator and may be reached at 330-264-8722.

 CFAES provides research and related educational programs to clientele on a nondiscriminatory basis. For more information, visit cfaesdiversity.osu.edu.