Consumer responses to the COVID-19 crisis: evidence from bank account transaction data*

Abstract

In this paper, we use transaction-level bank account data from Denmark to study the dynamics of consumer spending during the COVID-19 pandemic. We document that aggregate spending initially dropped by almost 30 percent but recovered almost fully after the first wave. While spending plummeted in categories severely affected by supply restrictions, it increased in unaffected categories. Individual exposure to health risks and supply restrictions was associated with much larger spending cuts than exposure to income risk and unemployment. The findings suggest that the contraction was mainly caused by temporary health risks and supply restrictions, with a limited role for persistent negative spillovers.