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To get a better sense of spending potential, particularly across categories, we leverage Wave 2 of the US Covid-19 Vaccine Consumer PulseCheck. ÃÛ¶¹ÊÓƵ Evidence Lab conducted an online survey of 1,000 US consumers from April 15th to 20th. Respondents were asked "how would you expect your spending on each of the below categories to change after businesses and restrictions start to return to normal".

On an income weighted basis, survey results point to a 7% jump in total spending, just 17bp less than the March 2021 survey and after actual spending rose in Mar-Apr. This supports ÃÛ¶¹ÊÓƵ economists' forecast for very strong consumption growth in 2021. 49% of respondents expect to increase spending, with 29% expecting >10% growth, both down just 3pp vs March. 14% of respondents plan to decrease spending vs 16% prior.

Those earning over $80k annually expect to increase their spending by over 8%, compared to a 3.4% rise for those earning less than $30k, which both stayed the same. The 4.6% increase for middle income was 60bp lower than March 2021. The results support our view that higher income households are key to driving the consumption recovery, as their spending was consistently ~10% below pre-COVID levels in H2 '20 - compared to ~5% below for middle income and in line for lower income HHs.

Groceries & Household products again ranked 1 of 18 categories on expected growth, followed by health-related, which was the only category to see a notable rise in expectations vs March 2021. Housing related/home improvement stayed #3 while gasoline/other energy fell to fourth. Financials services/savings and Tech products rounded out the top 6. COVID hit categories were in the bottom six (descending): restaurant/bars/takeout, vacation/travel, transport svcs, events/leisure, luxury goods. Expected growth for these areas fell 100-250bp to 3% or below on an income wtd basis.

The high and middle income cohorts both saw a ~2.6pp decline in vacation/travel spending expectations, with a 3.6pp drop for 55+ y/o consumers. 25% of respondents actually expect to decrease spending on vacation/travel vs 22% in March 2021. Restaurant/bar spend expectations also took a 2-3pp hit across all income and age cohorts. Events/leisure intentions weakened too, albeit from a low ranking in the March 2021 survey.

The survey results suggest that spending in COVID hit areas may come back more slowly than hoped after the recent bounce and consumption habits may be stickier than many anticipate. The massive and growing capacity for US consumers to spend keeps us positive the reopening theme, but the survey is a reminder that many aspects are still uncertain. The relatively muted expectations for COVID-hit areas in the survey would support having broader exposure to the inflection in consumption, and not overly concentrated in hard hit industries. Our work shows that the low quality rally is very far along. Thus we would look to move up the quality spectrum for the reopening theme as well given uncertainty remains.