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It’s finally Friday – time to relax. Everyone enjoy their weekends!

Consumer Spending Fell a Record 13.6% in April
US consumer spending (the economy’s main engine) fell by a record -13.6% in April during the COVID-19 lockdowns. Does this mean we’re screwed? Eh – there are signs it might begin to pick back up soon. Personal income (wages, interest, and dividends) increased +10.5% in April driven by the government stimulus checks.

The April decline in spending was the steepest for records tracing back to 1959 – that’s 61 years ago! This weak April spending adds to the evidence that the US economy is in for a long, slow recovery. COVID-19 wiped out a decade of job growth within a single month.

Check out this sweet illustration I found that breaks down personal spending across the country –

Americans’ concerns about the path of the economy was a factor behind a sharp rise in savings in April. The personal-saving rate, which is the difference between disposable income and spending, surged to 33% in April from 12.7% in March and 8.2% in February, the month before widespread shutdowns.

Are you all saving more or spending more? Ya boy Austin is making sure his savings account is nice and fat.

Canada GDP Fell at Near Record 8.2%
Canadian economic output plunged by a new record in the first quarter, as household spending collapsed on coronavirus-induced shutdowns. Exports also fell markedly.

Canada’s GDP fell -8.2% YoY in Q1 to only $1.53 Trillion dollars. The record quarterly decline in Canadian economic activity occurred in the first quarter of 2009 when output fell -8.7% during the height of the global recession. The Bank of Canada said last month it expects the level of GDP to be between -15% to -30% lower in Q2 compared with the end of last year. The central bank also said a “best-case scenario” for the Canadian economy would involve a short-lived recession followed by a strong rebound.

My Canadian friends, what are your thoughts? Are people eager to get back to work and build the economy or is there something else going on? Let me know below.

Will Food Companies’ Newfound Fortune Last?
COVID-19 has brought massive shifts in how Americans buy and consume food – for America’s major packaged-food companies, that means an unexpected swing up in sales. But how long will those sales last? Since the start of March, shares of General Mills, Conagra Brands, and Kraft Heinz are all up more than +20% and Campbell Soup is up +10%. To put things in perspective, the overall market is only up +3% in the same amount of time.

The initial weeks of the crisis saw an intense “pantry-loading” (and toilet paper haha) phase as Americans stocked up on shelf-stable products. In the week ended March 21, sales of canned soups, macaroni and cheese and beans were all up +200% – that’s insane!

These surges in demand put pressure on supply lines. Grocery stores responded by allocating more shelf space to big, widely known brands. But these trends are unlikely to prove permanent. More recent figures suggests Campbell Soups may see less benefit from the surges going forward due to the extended shelf life of their products.

I definitely bought a good 3 weeks supply of food when all of this began developing, but I’m not practicing that anymore. I go to the grocery store about once a week or so now – what about you?

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  1. Hey Austin, thanks for the update! appreciate it as always.

    i can’t speak on behalf of all Canada LOL! but most people i know are already back to work or will starting back this coming week as the provincial government in Quebec has allowed most places to open back up.

    Obviously there are still some restrictions on places that gather a-lot of people or requires people to be close, such as gyms and hair salons( barbershops). hopefully those open up soon!

    Honestly all i was a haircut!! hahah

  2. A fellow Canadian here! Uhm the roads have definitely picked up in the last two weeks, still not back to pre-covid conditions. I live south of Toronto, not to sure what it’s like there.

    I’m an Advisor for Canada’s largest FI and a lot of clients are investing in GICs for their short-term goals, or hoarding cash. Many small business’ are taking advantage of the 40k loan to help float payroll. If it’s a long road to recovery I don’t think that will be sufficient for most who have seen a significant decline in revenue. Most meetings involve mortgage and loan skip payments.

    Overall, it will be interesting to see how things play out here long-term. I’m assuming pretty similar to the US.

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