Private Consumption in Germany: The Impact of the Corona Pandemic Compared with Earlier Economic Crises

The positive labour market development was accompanied by steady growth in private household income and consumption. In 2020, the COVID-19 virus brought this sustained consumer boom to an abrupt end. By the end of that year, as a result of two waves of infection and the associated restrictions on private spending, lost consumption had reached a total of some 100 to 150 billion euros, depending on the reference scenario. This estimate suggests that every man, woman and child in Germany consumed between 1,250 and 1,750 euros less in 2020 as a result of the Corona crisis. The TCB-IW Consumer Confidence Survey, which forms part of the Global Consumer Confidence Survey and is published jointly by The Conference Board (TCB) and the German Economic Institute (IW), provides guidance on the pressures on private consumption in Germany in the first quarter of 2021. So far, 70 per cent of the huge loss of confidence experienced in the second quarter of 2020 has already been restored. However, at just over 97 points in the first quarter of 2021, consumer confidence was still more than 5 points below its level in the fourth quarter of 2019, the last before the crisis hit Germany. Despite the restrictions still remaining in the first quarter of 2021, improved employment prospects prevented the sharp drop in confidence that occurred in the second quarter of 2020. However, lost consumption is likely to amount to a further 40 to 60 billion or more euros in the first three months of 2021, again depending on the reference scenario.