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Post-Covid-Indicator 9-22-21

Post-Covid Indicators

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US Consumer Goods Preference to Remain Elevated in Q1’22

Flexport’s Post-Covid Indicator measures the balance between U.S. consumers’ spending on goods versus services. Our latest forecast shows the preference for goods will continue at close to current, elevated levels throughout the first quarter of 2022.

Covid-19 triggered a boom in demand for goods, but how long will it last? We analyze exclusive shipping data to peek into the future. The monthly Flexport Post-Covid Indicator shows how demand could shift in the coming months.

The Methodology: The Flexport Post-Covid Indicator is based on an analysis of correlations between detailed shipping data and national consumption behavior. As one would expect, given how goods move, the closest correlations are between shipping flows in a month and consumption a bit later. Using the estimated model, we can look at more recent shipping data and forecast the consumption patterns that are likely to follow.

January 14, 2022 Update The elevated pressure on global supply chains is the result of two factors in combination: strong incomes and a preference for goods in consumption. Flexport’s Post-Covid Indicator tracks the latter.

The PCI compares the balance of spending in summer 2020 (PCI = 100) to that before the pandemic (PCI = zero) and reached a peak of 156% in April 2021. It subsequently declined in late summer before recovering once more to reach 122% in October

Our latest estimate shows a renewed increase in the ratio of spending on goods versus services such that the November PCI rebounded to 144%.

As the holiday season passes the PCI forecast calls for goods preference to settle into a persistent 125%-135% range, with the December reading-matching US Bureau of Economic Analysis data due to be published on Jan. 28-expected to dip to 125% before holding at 130% through most of the first quarter of 2022.

That represents a highly elevated level versus the pre-pandemic period and some elevation above the early-pandemic goods rush. As discussed in Flexport Research’s 2022 Outlook, the prospect for consumer spending preferences will in part be a function of the progress of the COVID-19 pandemic. The rise of the Omicron variant generates particular uncertainty.

The next update for the Flexport PCI will be on February 17. BEA will release December data on Jan. 28, January data on Feb. 25 and February data on March 31.

Please direct questions about the Flexport PCI to economics@flexport.com.

Disclaimer: The contents of this report are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. Flexport does not guarantee, represent, or warrant any of the contents of this report because they are based on our current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This report has been prepared to the best of our knowledge and research; however, the information presented herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this report.

Indicators

Indicator Release Date Release
Post-Covid Indicator December 17, 2021 View PDF
Post-Covid Indicator November 17, 2021 View PDF
Post-Covid Indicator October 15, 2021 View PDF
Post-Covid Indicator September 17, 2021 View PDF
Post-Covid Indicator August 17, 2021 View PDF
Post-Covid Indicator July 2021 View PDF

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