During many pandemics, consumers trapped in Western homes got everything from personal computers to treadmills. Today, as vaccination campaigns take hold, people are obsessed with closely related services such as haircuts, dining out, and live music events that have long been banned.

The shift to services is at the heart of the high stakes debate for business, economists and policy makers.

They must consider whether new spending on services to Western consumers, especially travel, entertainment and personal care, will come at the expense of reduced spending on commodities. The answer is particularly significant. Because of inflation.

In a recent survey, euro area business leaders told the European Central Bank that they expected some spending to be diverted from consumer goods. This has the potential to relieve the pressure from factories around the world which are strained to meet demand.

However, some believe that the recovery of the economy will eliminate these traffic jams and thus increase spending on services, because they believe that the household has accumulated a lot of savings. They can spend both on goods and on services.

McKinsey Global Institute economist Jana Remes said: “So just because they’ll be able to spend more on services doesn’t necessarily mean they don’t have the purchasing power to keep spending on goods. . “

April’s spending figures in US stores confirm this view. Retail sales have not changed They have increased 10.7% since March, a higher level than before the pandemic, but the risk of using many services generally close to others is low.

The pandemic has reversed the usual trend of spending. A recession is usually accompanied by a decrease in purchases of consumer durables (products that can last for years). This is because consumers can postpone purchasing these products until their financial luck improves. Instead, they spend money on basic necessities such as food.

However, during the pandemic, people spent a lot of money on durable consumer goods such as furniture, appliances, and household exercise equipment. Meanwhile, services that would normally last during a recession were down or behind schedule. For example, in a typical recession, people cut their hair as often as usual when the economy is growing.

However, the recovery is not only the opposite of the shutdown, but as spending on services increases, spending on goods also increases.

Spikes in spending on services will usually necessitate slowing spending on others, unless people are willing to borrow more. People usually can’t afford it, so they have to cut some spending to increase other purchases.

But the accumulation of savings changes this calculation. Overall, these savings are substantial. Oxford Economics estimates the total at $ 4.7 trillion. Some parts of the global economy may be more constrained than others, as there is variability among countries with increasing savings, from just under 12% of annual U.S. economic output to about 1 % of Denmark. There is sex.

The distribution of these savings is not even done among households. Generally speaking, during a pandemic, the rich and the elderly accumulated more savings than the young and the poor.

As a result, some people are less constrained than others. However, in the United States, the Biden administration’s new financial support program is expected to ease the constraints of low savings, allocating an estimated $ 705 billion for the relocation of poor households in 2021.

Corrado Macchiarelli, economist at the UK’s National Institute for Economic and Social Studies, said:

The European government has not yet decided to match these payments, building on existing benefit programs. As a result, US households may be in a better position to spend on reopening than consumers in other parts of the world.

Of course, spending on personal computers and other durable goods that people bought more of during the pandemic could continue at current levels. However, there are a lot of things that consumers did not buy at the time of the lockdown, like clothes, and people could only refresh their wardrobes when they returned to work or socialized. Therefore, on the whole, buying goods can hold up.

Write to Paul Hanon paul.hannon@wsj.com

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