(BofA) – Pent-up consumer spending will drive recovery, economist tells Denver business leaders | Focus on Denver
Increased household savings levels, lack of a negative income shock that accompanies most recessions and pent-up consumer spending will all drive a post-pandemic recovery, an economist told a group of Denver business leaders.
“Consumers are going to drive the recovery, because they were the main recipients of the stimulus money,” said Michelle Meyer, economist with (BofA) Securities. “Disposable income today, and right after the recession, is higher than it was prior to the pandemic. There’s more aggregate income now than there was after coming out of 10 years of recovery.”
Meyers forecast came Wednesday via Zoom at the Downtown Denver Partnership’s annual Economic Forecast event.
Meyer said most Americans “didn’t see the negative income shock” that accompanies most recessions, largely because of the stimulus money plus expanded and extended unemployment benefits from the federal government.
“Then they didn’t have any place to spend it,” Meyers said, so many socked it away in savings.
While savings levels have typically grown slowly, 2020 saw a “big bump” as Americans accumulated $1.4 trillion in “excess savings,” she said.
“That’s a lot of purchasing power,” Meyers said.
The spending Americans did do during the pandemic has been in household goods.
“We went from an experience-based economy to a goods based one overnight,” Meyers said.
(BofA) (Bank of America) data comes from analyzing credit and debit spending of account holders. The company boasts market saturation of 1/5 households using (BofA) debit or credit cards, thus the data is a solid representation of larger trends.
DDP President and CEO Tami Door said Denver’s economy is poised to bounce back quicker than other cities.
“We have to embrace optimism, not just for the sake of being optimistic, but because we have informed data backing that up,” Door said. “We’ve overcome hardship before with our sense of innovation, key infrastructure and the strong collaboration that’s rooted in all we do.”
Downtown – like most all urban areas across the county – has suffered with the pandemic shut down eliminating all entertainment with crowds and businesses forced to limit their use of office space.
There was typically 250,000 people downtown on any given day pre-pandemic. That number plummeted to an average of 50,000 in 2020, she said. There are about 27,000 downtown residents and the DDP forecast 35,000 by 2025.
“We’re still on track,” Door said, noting the continued population growth in metro Denver overall. She included the development projects still in the pipeline and the existing new developments like McGregor Square, 16 Market Square and Block 162 continuing to grow.
“As people figure out the hybrid work mode between home and the office, cultivating character and amenities downtown is absolutely key right now,” Door said. “Never has building a place where people and businesses want to be been more critical.”