COVID-19, Containment and Consumption

We assess the impact of the COVID-19 pandemic on consumption indicators by estimating the effects of government-mandated containment measures and of the willingness of individuals to voluntarily physically distance to prevent contagion. To do this, we use weekly panel regressions across Canadian provinces to study how differences in both containment measures and voluntary physical distancing affect consumption, proxied by transaction data. We also conduct a similar panel analysis across 28 advanced economies using retail mobility data as a proxy for in-person consumption of goods and services. Two main findings are broadly robust across a variety of tests and specifications. First, indicators of both government containment measures and voluntary physical distancing are negatively correlated with consumption indicators, with the latter relationship showing variation over time. Second, contact-intensive and other highly restricted sectors in Canada were generally more affected by increases in the stringency of government containment measures and voluntary physical distancing. In contrast, the impact from voluntary physical distancing on spending categories deemed essential by some Canadian provincial governments was muted relative to the impact on other categories.