The Conference Board uses cookies to improve our website, enhance your experience, and deliver relevant messages and offers about our products. Detailed information on the use of cookies on this site is provided in our cookie policy. For more information on how The Conference Board collects and uses personal data, please visit our privacy policy. By continuing to use this Site or by clicking "OK", you consent to the use of cookies. 

31 Mar. 2020 | Comments (0)

One of the striking features of COVID-19 is that it appears to be much more dangerous for older people than for younger people. As a result, older people are more likely to stay at home and avoid having other people enter their home. As older Americans will experience a longer and more extreme social distancing, they are likely to cut back on spending more than younger people.

Households where the head of the household is 65 years old or older (referred to below as “older households”), are responsible for 22 percent of total household expenditures in the US. In many consumption categories, they are responsible for a much higher share.

In Chart 1 we show several consumption categories where 1) older people are responsible for an above average share of spending and 2) where older people are more likely to cut spending on due to social distancing.

These consumption categories most impacted can be divided into three groups:

  • Travel and lodging. Older people spend more on vacationing. For example, older households’ fondness of cruises makes them responsible for over a third of all expenditure on ship fares.
  • Full-service restaurants. Older households have an outsized share in restaurant spending. For example, about 30 percent of spending on breakfast and lunch in full-service restaurants comes from older households.
  • Repair and maintenance. Social distancing may impact not just on outdoor activities, but also activities that will require other people to enter their home. Older people will be more reluctant letting people enter their home. In some of these categories older households tend to spend more than younger ones. For example, 45 percent of the spending on repair and remodeling services is spent by older households.

In sum, in many of the consumption categories that are especially sensitive to social distancing, older households are responsible for a large share of spending. Other things equal, these categories will experience a larger drop in spending because of the more extreme social distancing of older Americans.


Chart 1: Older households make up an especially large share of spending in repair and maintenance, full-service restaurants, and travel and lodging

Share of spending coming from households with a household head 65 years or older

Chart 1

Source: Consumer Expenditure Survey from the US Bureau of Labor Statistics


Since older people are more likely to cut spending, areas with a higher share of older people are also likely to see a bigger drop in consumer spending. Chart 2 shows the share of population 65+ across metro areas. The metro areas with the highest share of older people are typically:

  • Retirement destinations. Florida, the shore of the Atlantic Ocean, and Arizona stand out. Many of these metro areas will suffer from a double whammy. Not only they have many older consumers, they also are vacation destinations that in a period of social distancing will lose a lot of business.
  • Metro areas with declining industries. Metro areas in states such as Ohio, Pennsylvania, and West Virginia had a strong concentration of declining industries such as steel and coal, leading to out-migration of younger people.

Businesses should expect a large variation in the impact of COVID-19 across metro areas, partly due to the large variation in the share of older households. With the share of older Americans rapidly growing in the US, businesses, especially in the hard-hit metro areas, should do everything they can to accommodate a safe consumer experience.


Chart 2: The share of older people is especially large in retirement destinations and metro areas with declining industries

Share of population 65 and above by metro area, 2017

Chart 2

Source: US Census Bureau


  • About the Author:Gad Levanon, PhD

    Gad Levanon, PhD

    Gad Levanon is Vice President, Labor Markets for The Conference Board, where he oversees the labor market, US forecasting, and Help Wanted OnLine© programs. His research focuses on trends in…

    Full Bio | More from Gad Levanon, PhD

  • About the Author:Frank Steemers

    Frank Steemers

    Frank Steemers is an Economist at The Conference Board and his expertise is primarily in the analysis of the labor market in the US and other mature economies. Based in New York, he conducts statistic…

    Full Bio | More from Frank Steemers

  • About the Author:Ben Cheng

    Ben Cheng

    Ben Cheng is a Senior Methodologist in the economics department at The Conference Board. He received his undergraduate degree in economics with honors and mathematics at New York University. Ben …

    Full Bio | More from Ben Cheng

     

0 Comment Comment Policy

Please Sign In to post a comment.

    Subscribe to the Labor Markets Blog
    SUBSCRIBE HERE
    Support Our Work

    Support our nonpartisan, nonprofit research and insights which help leaders address societal challenges.

    Donate

    OTHER RELATED CONTENT

    RESEARCH & INSIGHTS

    WEBCASTS

    CONFERENCES & EVENTS

    Employee Financial Well-Being Conference

    Employee Financial Well-Being Conference

    December 08 - 09, 2020 | (, )

    COUNCILS

    BLOGS

    PRESS RELEASES & IN THE NEWS