How Did the Government Shutdown Impact Consumer Spend in Our Panel?

The U.S. federal government was shut down for 35 days, from December 22nd, 2018 to January 25th, 2019. 
 "It's hard to know just how much the shutdown is depressing consumer spending because the Commerce Department, which compiles and reports such data, was itself closed by the shutdown." -Associated Press (1.24.2019)*

Using our access to debit, credit and bank activity of millions of anonymous U.S. consumers, Earnest investigated the economic impact of the government shutdown on spend in our panel and found that the shutdown depressed consumer spending growth by ~40bps.

Methodology 
We identified a cohort of government employees who received their last paycheck in December 2018 (~4% of the observed consumer panel). We analyzed the change in total spend across hundreds of merchants we track and compared that to the rest of the country.

To quantify the overall impact, we then measured how much spend decreased in the panel by including the government-impacted cohort across specific verticals.

Here's what we saw in our data:

  • All verticals were negatively impacted, except Insurance (Geico, PGR, ALL, StateFarm), which was flat.

  • Unsurprisingly, Travel (flights and rental cars) showed the most negative impact at 80bps.

  • Most verticals saw a 40 to 50bp impact, with Apparel, Home and Restaurants at the higher end.

  • There was less of an impact (20 to 30bps) at the Grocers, Telecom and interestingly Leisure (theaters and theme parks), which saw a 26bp impact.

 

*Following the shutdown, the Congressional Budget Office estimated that economic output was reduced by $3 billion in 4Q18 (~10 bps of real GDP) and $8 billion in 1Q19 (~20 bps), with majority expected to be recouped in subsequent quarters.  

 

We analyzed the spending divergence between the two cohorts below. We looked at their overall YoY spend by week and zoomed in by vertical.  

Past Analyses

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