The Wall Street Journal says consumers have cut back on grocery purchases over the past month:
With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store
Grocery shoppers are cutting back on spending, data show, a sign that Americans are hurting for cash as the federal unemployment stimulus remains on hold for most recipients.
…While sales of groceries, such as frozen dinners, cereal, soup and coffee, are still higher than they were a year ago, sales growth has slowed compared with July and prior months in the pandemic. Sales growth of frozen dinners, for instance, averaged about 9% for the three weeks ended Aug. 16, compared with around 17% for the previous two weeks, according to the IRI CPG Demand Index. Cereal sales, meanwhile, averaged a 2% increase the three weeks ended Aug. 16, compared with about 6% average growth the prior two weeks, the IRI data show.
Ahem. For starters, the BEA just released data for spending on groceries through the end of the second quarter. Here it is:
Spending on groceries skyrocketed during the first two quarters of the year thanks to more meals being eaten at home. It’s pretty obvious that this kind of growth couldn’t last forever, so of course it slowed down in August. It could hardly do anything else.
And despite the Journal’s headline, there’s no evidence that consumers are “cutting back on spending” at the grocery store. There is merely evidence that grocery sales aren’t growing as fast as they did earlier in the year. That’s a very different thing.
There’s little doubt that the end of unemployment bonuses affected spending on food and everything else starting in July. There’s also little doubt that spending on groceries will begin to fall as the country opens back up and spending on restaurant meals gets back to normal. But for now, none of that has happened. Consumers haven’t cut back on grocery purchases, they’ve just hit a new, higher plateau and are now spending at that level rather than continuing to grow forever. That’s all.