Impact

July CPG Economic Pulse

Economic Tug-of-War Between Reopening America and Controlling the Spread of COVID-19

The CPG Pulse

Welcome to the first edition of the CPG Economic Pulse, a monthly look at the CPG industry’s performance in the context of the broader economy. This report analyzes the totality of the industry — food, beverage, household and personal care products — to offer a timely look at an industry that contributes $2 trillion to the U.S. economy and supports more than 20 million jobs. 

The Top Take

CPG product purchases are up — 9.9 percent year-over-year — as a result of heightened demand from Americans still at home more, but increases are set against a backdrop of an economy that has a long road ahead.

    • May-18
    • Jun-18
    • Jul-18
    • Aug-18
    • Sep-18
    • Oct-18
    • Nov-18
    • Dec-18
    • Jan-19
    • Feb-19
    • Mar-19
    • Apr-19
    • May-19
    • Jun-19
    • Jul-19
    • Aug-19
    • Sep-19
    • Oct-19
    • Nov-19
    • Dec-19
    • Jan-20
    • Feb-20
    • Mar-20
    • Apr-20
    • May-20
    • Retail Sales % Change Yr/Yr
    • 7.0
    • 6.5
    • 7.1
    • 6.4
    • 4.6
    • 5.8
    • 4.4
    • 0.7
    • 3.2
    • 2.2
    • 3.5
    • 4.1
    • 2.9
    • 3.6
    • 3.7
    • 3.6
    • 3.6
    • 2.8
    • 2.4
    • 6.1
    • 4.4
    • 4.1
    • -1.0
    • -16.7
    • -6.6
    • Consumer Goods % Change Yr/Yr
    • 5.6
    • 4.1
    • 4.8
    • 4.3
    • 3.6
    • 3.9
    • 4.3
    • 1.1
    • 3.6
    • 1.8
    • 3.0
    • 3.4
    • 2.8
    • 3.9
    • 4.1
    • 4.0
    • 3.2
    • 3.0
    • 2.2
    • 4.0
    • 1.9
    • 3.7
    • 21.1
    • 6.2
    • 9.9

The Deep Dive

Despite reopening, the economic landscape looks significantly different than a few months ago. Occupancy restrictions at many businesses allow for fewer customers. Looking forward, the lingering effects of the pandemic will critically limit the pace of economic activity due to a slow job recovery, especially as government stimulus programs run out.

    • 2018Q1
    • 2018Q2
    • 2018Q3
    • 2018Q4
    • 2019Q1
    • 2019Q2
    • 2019Q3
    • 2019Q4
    • 2020Q1
    • 2020Q2F
    • % Real GDP Growth
    • 2.6
    • 3.5
    • 3.0
    • 1.1
    • 3.1
    • 2.0
    • 2.1
    • 2.1
    • -5.0
    • -35.7
    • % Unemployment Rate
    • 4.1
    • 3.9
    • 3.8
    • 3.8
    • 3.9
    • 3.6
    • 3.6
    • 3.5
    • 3.8
    • 13.0

Government stimulus funding has helped move the economy into a recovery stage and fueled increases in household spending through July, but the runway for growth will be short without more fiscal support and the prospects of further funding may be reduced by the stronger-than-expected June jobs report.

Real GDP declined five percent in the first quarter of 2020, the largest quarterly decrease since 2008. Declines in consumer spending largely accounted for the reduction in economic activity in the first quarter.

June payrolls surged by 4.8 million jobs, dropping the unemployment rate to 11.1 percent, as businesses that had closed due to the pandemic opened their doors.

The last two months have brought back 7.5 million jobs; however, the labor market has a long way to go to recoup the 22 million jobs lost in March and April.

    • Jun-19
    • Jul-19
    • Aug-19
    • Sep-19
    • Oct-19
    • Nov-19
    • Dec-19
    • Jan-20
    • Feb-20
    • Mar-20
    • Apr-20
    • May-20
    • Jun-20
    • Monthly Change Nonfarm Employment Change (Jobs in Thousands)
    • 182
    • 194
    • 207
    • 208
    • 185
    • 261
    • 184
    • 214
    • 251
    • -1373
    • -20687
    • 2509
    • 4800

Though down 22.9 points from February, the final June reading of the University of Michigan’s consumer sentiment index was 78.1, up from 72.3 in May.

Improvements overall are still mild, evidence that consumers are likely to remain cautious of their spending until they have more clarity on the virus’ outcome.

Confidence in the industry, however, is up. In our most recent consumer poll, 46 percent of Americans reported their trust in the industry had grown based on its response to the pandemic.

    • May-18
    • Jun-18
    • Jul-18
    • Aug-18
    • Sep-18
    • Oct-18
    • Nov-18
    • Dec-18
    • Jan-19
    • Feb-19
    • Mar-19
    • Apr-19
    • May-19
    • Jun-19
    • Jul-19
    • Aug-19
    • Sep-19
    • Oct-19
    • Nov-19
    • Dec-19
    • Jan-20
    • Feb-20
    • Mar-20
    • Apr-20
    • May-20
    • Jun-20
    • Univeristy of Michigan Consumer Sentiment
    • 98.0
    • 98.2
    • 97.9
    • 96.2
    • 100.1
    • 98.6
    • 97.5
    • 98.3
    • 91.2
    • 93.8
    • 98.4
    • 97.2
    • 100.0
    • 98.2
    • 98.4
    • 89.8
    • 93.2
    • 95.5
    • 96.8
    • 99.3
    • 99.8
    • 101.0
    • 89.1
    • 71.8
    • 72.3
    • 78.1

Consumers are not, however, cutting their spending on CPG products. Americans are still spending more time at home, leading to a 4.1 percent increase in purchases of CPG products over April, and a 9.9 percent increase year-over-year, with gains in all categories.

The increase over the last month was driven by a burst of pent-up demand and the need to replenish stocks built up in March at the onset of stay-at-home orders.

    • Sep-19
    • Oct-19
    • Nov-19
    • Dec-19
    • Jan-20
    • Feb-20
    • Mar-20
    • Apr-20
    • May-20
    • Disposable Personal Income % Change Yr/Yr
    • 4.4
    • 4.1
    • 4.4
    • 3.5
    • 4.2
    • 4.2
    • 1.6
    • 14.6
    • 8.8
    • Consumer Goods % Change Yr/Yr
    • 3.2
    • 3.0
    • 2.2
    • 4.0
    • 1.9
    • 3.7
    • 21.1
    • 6.2
    • 9.9

Stimulus checks are going toward CPG necessities. The U.S. Census Bureau’s Household Pulse Survey conducted June 11-16 showed that 85.5 percent of respondents received or expected to receive a stimulus check. Eighty percent said they would spend at least part of their stimulus check on food and 58 percent reported they would spend it on household or personal care items, among other necessities like paying the mortgage or car payments.

Stimulus payments have kept personal income from plummeting. While personal income decreased 4.2 percent in May, that decline follows a surge in April of 10.8 percent. Government programs have been the driving force behind a seven percent rise in personal income since May 2019.

Recovery will be long and slow, but this month’s report offers silver linings in the data that suggest the recession will be shorter than the one experienced in 2007-2009.

 

 

About This Research

Consumer Brands’ CPG Economic Pulse analyzes the totality of the industry — food, beverage, household and personal care products — to offer a timely look at an industry that contributes $2 trillion to the U.S. economy and supports more than 20 million jobs.

Methodology

Economic analysis provided by JEK Analytics.

The CPG purchases data is derived from U.S. Bureau of Economic Analysis reporting.

Estimates include food, nonalcoholic and alcoholic beverages for off-premises consumption; food purchased and consumed on farms; nonprescription drugs, household supplies and personal care purchases; and net purchase of goods by U.S. residents abroad.

The Economic Contributions of CPG

The CPG industry is the largest manufacturing employer in the United States. The food, beverage, household and personal care products that the industry makes have a positive impact on the lives of every American, every day.

Learn more