People over 65 are the group least affected by the individual spending crisis, according to a study by the BBVA Foundation
Individual consumption has only partially recovered from the fall caused by the impact of the pandemic. Despite growing 3.5% in 2021, it is still 7% lower than in 2019. The gap stands at 25% when the data is compared to that of 2007, before the great recession, according to a report drawn up by the BBVA Foundation.
According to the study, individual consumption fell to 16,500 euros per year in 2020, 10.1% less than the year before. Although the recovery is fast and consumption in 2021 amounted to 17,100 euros, 3.5% more, it is still a long way from the maximum of 22,800 euros in 2007.
As the BBVA Foundation explains, the Great Recession already had a strong impact on individual consumption reached at the turn of the century, which dropped 24.7% from that 2007 maximum figure to 17,200 in 2014. According to the report, the decline even more accentuated in households with more members, including those with dependent children, whose consumption fell by 25.9%.
In addition, the study indicates that the long duration of this period of financial crisis has led to an increase in inequality in the distribution of individual consumption, which has not shown any improvement even in the recovery period, between 2014 and 2019.
“While the reduction in consumption in 2020 due to the general confinement of the population due to Covid-19 has led to a reduction in inequality, the recovery in consumption in 2021 has been accompanied by a new increase in it”, is warned in the BBVA Foundation study.
It should be noted at this point that the individual consumption analyzed by the study includes all items included in the National Institute of Statistics (INE) household budget survey, which ranges from food and drink, clothing and footwear, housing, water , electricity, expenses for transport, leisure, education or health and other goods and services.
According to the report, the decline in individual consumption due to the Great Recession was greater in households with more members, including those with dependent children, and is also greater the younger the household is.
In households with dependent children, the fall in individual consumption between 2007 and 2014 was 27.6%, from EUR 22,600 to EUR 16,400. Although this figure had risen to €17,900 in 2019, it was still the lowest of the three household groups considered: adults with dependent children, adults without dependent children and adults over 65 years of age.
Households consisting of over-65s, mostly pensioners, assumed the lowest individual consumption level, 17,800 euros in 2007, and remained virtually unaffected by the recession.
Finally, households with adults without dependent children, which enjoyed the highest level of individual consumption before the crisis with EUR 24,800 in 2007, suffered a 26.7% decline to EUR 18,200 in 2014 and a subsequent recovery until 2019. from 5 .3%.
As a result, in 2007 the maximum difference in individual consumption between the three types of households was 7,100 euros, in 2019 it was 1,300 euros. “Covid-19 has reduced individual consumption in the three types of households, although households with adults over 65 are the least affected,” the report concludes.
In terms of inequality parameters, the report points out that the consumption inequality index shows that the onset of the Great Recession led to a decline of 1.1 points, from 29.2 in 2007 to 28.1 in 2008.
During the years of recovery, inequality increased and in 2015 it returned to the level of 2007, a value that has been practically maintained until 2019.
While the decline in consumption in 2020 due to the general lockdown of the population due to Covid-19 caused a slight reduction in inequality of 0.6 points compared to 2019, with the recovery in consumption in increased again in 2021, to 28.7, more than the 2008 indicator.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
