The Economic Impact of Working From Home More Often

The Economic Impact of Working From Home More Often

The pandemic has brought a massive shift to the workplace: More of the U.S. population is working from home, more often. Sending people home to work was an effort to combat the virus. However, this shift may become more of the norm and substantially impact how we spend money in the future.


Exploring the Changes

The change in how we work has significant implications on how and where we spend money, especially in these four areas:

Food
Housing
Apparel
Transportation

One way to explore the impact working from home may have is to look at the habits of retirees. This sizeable group of people already spend most of their time at home.

Comparing worker and retiree spending habits gives insight into how a large, prolonged shift toward working from home might affect spending in these areas.

Food

HALF
of away-from-home spending is on breakfast and lunch, two categories at serious risk from the shift to working from home.



Housing

The shift to telecommuting by a significant portion of the workforce could drive an increase in annual maintenance and repair spending of up to
$40 billion.


32% increase in annual maintenance and repair spending by wage and salary earners.


Home repair retailers and building materials companies will benefit.


Apparel

Wage and salary earners' potential impact across apparel:

Less need for office attire means we could see a loss of up to
$26 billion
in annual spending on apparel overall.



Negative implications for department stores, specialty apparel retailers, as well as related businesses, such as dry cleaning, alterations, etc.


Transportation


10%
We see a cut of around 10% in transportation spending by workers, spread across vehicle purchases, fuel and maintenance costs.


Annual transportation spending across all industries may fall by as much as $130 billion.


 

Positive environmental impact


How Does This Affect Investments?

You shouldn’t make decisions based on specific events, such as potential treatments or other COVID-19 news. Instead, we can look at the environment and changes to daily life and ask if these trends are the new normal.

Consumer spending drives our economy, so changing habits are important. Workers account for roughly two-thirds of all spending. Those in the most likely work-from-home occupations also tend to spend the most. When these workers stay home and spend less—even a small amount—businesses and the economy can suffer.

Our investment professionals see these effects on individual companies. 

  • Restaurants that rely heavily on breakfast and lunch traffic are struggling.
  • Companies specializing in home repairs and building supplies are seeing better results.
  • Apparel and transportation stocks are experiencing negative effects on their businesses.

For every stock they choose, our experts evaluate current and future earnings reports and trends. 


Regardless of how global events impact the markets and the economy, we're here to help with your personal investments.

You need a plan. Let us help.

1Source: Bureau of Labor Statistics (BLS)-Job Flexibilities and Work Schedules, averages for the period 2017-2018.

2Source: Stanford Institute for Economic Policy Research (SIEPR), data from a survey of 2,500 U.S. residents carried out between May 21-29, 2020.

Source: American Century Investments and the U.S. Bureau of Labor Statistics Consumer Expenditure Surveys as of 12/31/2018, the latest data available.

Using annual expenditures from the BLS surveys in the four key areas shown, we calculated the difference in spending between wage earners (workers) and retirees who stay at home. We then determined the potential increase or decrease in annual spending if more workers were to follow similar spending patterns as retirees.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

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