COVID-19 Economic Policy Effects on Consumer Spending and Foot Traffic in the U.S

TL;DR

This study analyzes how US government COVID-19 policies like stimulus checks and reopening affected consumer spending and foot traffic, revealing immediate spending boosts from stimulus and regional differences in responses.

Contribution

It provides empirical evidence on the immediate and regional effects of stimulus payments and reopening policies on consumer behavior during COVID-19.

Findings

Stimulus checks significantly increased spending immediately.

State reopening had a small effect on consumer behavior.

Foot traffic increased gradually after stimulus issuance.

Abstract

To battle with economic challenges during the COVID-19 pandemic, the US government implemented various measures to mitigate economic loss. From issuance of stimulus checks to reopening businesses, consumers had to constantly alter their behavior in response to government policies. Using anonymized card transactions and mobile device-based location tracking data, we analyze the factors that contribute to these behavior changes, focusing on stimulus check issuance and state-wide reopening. Our finding suggests that stimulus payment has a significant immediate effect of boosting spending, but it typically does not reverse a downward trend. State-wide reopening had a small effect on spending. Foot traffic increased gradually after stimulus check issuance, but only increased slightly after reopening, which also coincided or preceded several policy changes and confounding events (e.g., protests) in the US. We also find differences in the reaction to these policies in different regions in the US. Our results may be used to inform future economic recovery policies and their potential consumer response.