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Even as states slowly begin to roll back stay-at-home mandates adopted earlier this year to slow the spread of the novel coronavirus, record-high unemployment will likely continue to stunt consumer spending.
According to a new study conducted by consumer research platform Alpha, about half of recently unemployed and furloughed Americans -- 46 percent -- did not feel confident they can meet their basic financial needs, no less play a vital part in restarting the U.S. economy.
Although retail stores, salons and malls are beginning to reopen in some states, about two-thirds, or 66 percent, of respondents said they're avoiding nonessential spending on items like clothing, accessories and shoes. Another 53 percent are planning to eliminate spending on beauty and personal care.
The number-one place where respondents are slashing costs is food. While many reported wanting to help local restaurants by ordering food, 68 percent said they're limiting the money they'd typically spend on takeout or delivery.
"To many, just staying afloat requires drastic or improvised cost-cutting exercises, including not getting into their car for fear of being tempted to spend, cutting off their cell phones, and shutting down their Amazon accounts and/or subscription services," the study found.
The travel industry may experience the longer-term effects of the virus-triggered shutdown, according to the study. Fifty-six percent of respondents are not only avoiding travel right now but aren't booking future trips, either.
In the two months since the virus paralyzed the economy, more than 36 million Americans have found themselves suddenly out of work, wiping out all of the jobs created during the past decade. Unemployment at this scale has not been recorded since the Great Depression.
In April, retail sales endured the biggest drop in history, plunging 16.4 percent.
The declines were pervasive across the retail sector, led by a 78.8 percent drop at clothing stores, a 60.6 percent decrease at electronics and appliance stores, and a 58.7 percent decline at furniture stores.
Consumer spending accounts for nearly two-thirds of the nation's GDP. In the first three months of the year, the U.S. economy shrank by 4.8 percent, the sharpest decline since the 2008 financial crisis.