A new analysis of 1.4 billion anonymised credit and debit card transactions during the first three months of 2020 shows that spending in Spain post-lockdown was an average of 49% lower than the same date the previous year.
Economists from the universities of Cambridge, Edinburgh and Imperial College in the UK worked with the Spanish bank BBVA, one of the largest financial institutions in the world, to study the “real time evolution” of economic activity during the COVID-19 pandemic.
“This is an unprecedented dataset of millions of everyday transactions, revealing the underlying costs of the coronavirus crisis,” said study co-author Vasco Carvalho, Professor of Macroeconomics at the University of Cambridge, and director of its INET Institute.
“We can see in high resolution the impact of extreme mobility restrictions on a major western economy. We find an abrupt and persistent decline in spending during lockdown, amounting to about half of what we might normally expect.”
The researchers found evidence of a major spending increase in the few days just before Spain’s lockdown began on the 14 March 2020, when daily expenditure growth shot up by 20 percentage points above average for the year.
Once lockdown began, daily spending halved on average. The researchers say that, while bank transaction data is “substantially more volatile” than overall consumption by households in Spain, they are closely linked.
As such, a “back-of-the-envelope calculation” for consumption movement during the pandemic suggests growth of just over 4% prior to lockdown dropped sharply to a -13% decline in average household consumption – a key indicator of GDP – once lockdown restrictions were in place.
“While considerable uncertainty surrounds these calculations, is seems hard to construct a scenario where average consumption of Spanish households is not declining somewhere between minus 10% and minus 15% during the period of lockdown,” said Carvalho.
The dataset charts the dramatic shift to online purchasing once lockdown was enforced. While both offline and online spending fell overall, the decline at physical points of sale was massive. As such, online shopping increased its market share by about 50%.
Image: A deserted Grand Via, in the heart of Madrid, a week after the lockdown started.
Credit: Nemo
Reproduced courtesy of the University of Cambridge