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How the COVID-19 Pandemic Changed Urban and Rural Spending Habits

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Graphic of adjacent rural and urban areas with a dollar sign superimposed
December 2022
How the COVID-19 Pandemic Changed Urban and Rural Spending Habits

Sara Hylton

In 2020, the COVID-19 pandemic affected the United States profoundly. In addition to the heavy toll on health and life, the pandemic also brought significant economic challenges, such as a drastic shift in workplace culture and the highest unemployment rate since data began in 1948. This Spotlight on Statistics explores how the COVID-19 pandemic influenced the spending behaviors of urban and rural consumers.

Rural areas have a steeper decrease in total expenditures during recessions

Recent historical consumer expenditure data show the same general patterns in both urban and rural areas between 2005 and 2020. Consumer expenditures decreased in both urban and rural areas during the 2007–09 recession and during the COVID-19 pandemic recession (March to April 2020), with the drop in rural areas being greater than the drop in urban areas.

From 2008 to 2010, spending fell more quickly in rural areas (by 10.2 percent) than in urban areas (4.3 percent). However, the differences during the COVID-19 pandemic were less pronounced. The decline from 2019 to 2020 was 3.3 percent in rural areas and 2.7 percent in urban areas.  


Most changes in urban and rural consumer expenditures trended in the same direction

We track differences in spending in urban and rural areas from 2019 to 2020 across 14 major spending categories. For 9 of the 14 categories, urban and rural expenditures trended in the same direction. Expenditures trended in opposite directions in entertainment, miscellaneous, healthcare, tobacco products and smoking supplies, and cash contributions during the height of the COVID-19 pandemic.

Healthcare expenditures increased in rural areas while decreasing in urban areas

The COVID-19 pandemic induced drastic changes in healthcare spending. Consumers in rural areas increased their spending on medical services by 26.2 percent from 2019 to 2020, while spending in urban areas decreased by 14.9 percent. Over the same period, expenditures on health insurance in urban areas grew 4.2 percent while increasing only 0.9 percent in rural areas.

The largest increase in healthcare expenditures was for medical supplies in rural areas, which grew 68.3 percent. This unusual growth was driven largely by increased spending on hearing aids. When hearing aids are excluded from medical supplies, the expenditures still rose by 18.2 percent.

Among the healthcare expenditure categories, drugs are the only category that declined in both areas, though by much more in rural areas. Conversely, health insurance is the only category that increased in both areas, with a larger increase in urban areas.

 

The COVID-19 pandemic curtailed spending on clothing in all areas

The COVID-19 pandemic led to severe restrictions across much of the country beginning in March 2020. People were discouraged from going to social events and retail outlets and even to their workplace. With fewer reasons to purchase new outfits, spending on apparel and services fell in both rural and urban areas.

The apparel and services category includes five subcategories: men and boys, women and girls, children under 2, footwear, and other apparel products and services.

The decline in spending on men’s and boys’ clothing was more pronounced in rural areas (−32.8 percent) than in urban areas (−26.9 percent), while the decline in spending for women’s and girls’ clothing in urban areas (−23.4 percent) was more than triple the decline in rural areas (−6.7 percent).

Urban consumers increased spending on alcohol at home during the pandemic

While total expenditures on alcoholic beverages decreased in both rural (−38.3 percent) and urban areas (−16.6 percent) during the pandemic, urban consumers increased their spending on alcoholic beverages at home by 6.1 percent. Expenditures for alcohol away from home decreased by 43.4 percent for urban consumers and by 61.0 percent for rural consumers from 2019 to 2020.

Spending on tobacco products followed a similar trend to that of alcohol at home, with a small increase in urban areas (0.6 percent) and a large decrease in rural areas (−15.0 percent).

Rural areas spent less on food both at and away from home

The COVID-19 pandemic led to restrictions on dining out, which was accelerated by stay-at-home orders. Spending on food away from home decreased in both urban (−32.0 percent) and rural areas (−44.9 percent). With these decreases, we might have expected spending on food at home to increase during the COVID-19 pandemic. This expectation held for urban areas, where spending on food at home rose 7.5 percent from 2019 to 2020. In rural areas, however, spending on food at home decreased by 7.8 percent.

Urban consumers drove less during the COVID-19 pandemic

The average annual spending on gasoline decreased 24.8 percent in urban areas and 18.8 percent in rural areas. Even though spending on gas decreased, this does not mean the amount of gas purchased decreased.

To calculate the amount of gas purchased, we must consider the average price per gallon of gasoline. Data from the Consumer Price Index (CPI) show the average price per gallon of gasoline was $2.70 in 2019 and $2.24 in 2020. We can then estimate the quantity of gas purchased by dividing the amount spent by the price per gallon.

Using this approach, we estimate that the average consumer unit in urban areas reduced their gas purchases by 67 gallons, or 9.5 percent, from 2019 to 2020. This suggests that urban consumers drove less during the pandemic.

While this method is suitable for urban areas, it does not apply to rural areas because the CPI data only cover the population in urban areas. However, if we apply this method to rural areas, rural gas purchases fell roughly 17 gallons, or 2.2 percent, from 2019 to 2020.

Despite the limitations of the rural calculation, it is still reasonable to assume that both urban and rural consumers used less gasoline in 2020 than in 2019, with urban areas having a larger decrease. This may be explained by the easier accessibility of stores in urban areas than in rural areas.

Urban spending on entertainment fees and admissions fell by nearly half

Earlier we mentioned how responses to the COVID-19 pandemic limited expenditures on dining out. A similar scenario also applies to spending on entertainment, since the COVID-19 pandemic also led to restrictions on communal activities, such as attending sporting events, concerts, and theatre performances.

The share of entertainment expenditures in urban areas for fees and admissions decreased almost by half, from 29.7 percent in 2019 to 15.4 percent in 2020, resulting in the only decrease among the entertainment categories. In contrast, the share for other entertainment supplies, equipment, and services almost doubled, increasing from 11.7 percent to 20.7 percent. This group includes such items as un-motored and motorized recreational vehicles, outboard motors, and photographic equipment.

Rural consumers spent significantly more on pets, toys, and hobbies in 2020

Changes in shares of entertainment spending in rural areas were more dynamic than in urban areas; that is, no subcategory in total entertainment for rural areas kept the same share between 2019 and 2020.

The share of entertainment expenditures in rural areas for fees and admissions dropped by around half, from 12.3 percent in 2019 to 5.7 percent in 2020. In urban areas, only the shares of fees and admissions decreased, whereas in rural areas, every category decreased in share except for pets, toys, hobbies, and playground equipment. This category grew substantially, from 28.1 percent in 2019 to 53.2 percent in 2020. The main driver for this growth is expenditures on pets.

Spending on pets increased in rural areas but decreased in urban areas during the pandemic

Spending on pets, toys, hobbies, and playground equipment increased greatly in rural areas from 2019 to 2020. This increase can be explained by an increase of spending on pets. While total spending on pets decreased by 9.4 percent in urban areas, pet spending increased by 133.9 percent in rural areas. The main driver for this large growth rate in rural areas is spending on pet food.

All four categories within pet spending increased in rural areas, with an unusually strong increase in pet food. If pet food is removed, the total expenditure on pets in rural areas still rose 26.9 percent. Conversely, in urban areas, not only did the total pet expenditures decrease by 9.4 percent, but spending on pet food decreased by 8.7 percent.

More information

Sara Hylton is an economist in the Division of Consumer Expenditure Surveys, U.S. Bureau of Labor Statistics. For questions about this Spotlight on Statistics, please e-mail Hylton.Sara@bls.gov.

The data presented in this Spotlight are from the 2019 and 2020 Consumer Expenditure Survey integrated detailed tables, which are available by request from the U.S. Bureau of Labor Statistics. All data and calculations are based on averages of annual expenditures. The focus is on geographic comparisons.

The Consumer Expenditure Surveys program consists of two surveys, the Interview Survey and the Diary Survey, that provide information on the buying habits of America's consumers. This includes data on their expenditures, income, and the consumer units’ characteristics. The U.S. Census Bureau collects the survey data for the U.S. Bureau of Labor Statistics.  

Before 2021, BLS defined an area as urban if its population lived in urban areas and urban clusters, which are densely developed territories that contain at least 2,500 people. Rural areas are outside of any Metropolitan Statistical Areas (MSAs) and have a population of less than 2,500. Beginning with the release of 2021 Consumer Expenditure data, the program updated the definitions of urban and rural areas. This article uses data before 2021, and the definitions in this article of urban and rural area are consistent with the timeframe of the data used.