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First Data Stats Reveal Hurricane-Induced Whipsawing of Consumer Spending
September 14, 2017
By Jim Daly
One advantage in providing merchant-acquiring services to 3.6 million U.S. locations is that First Data Corp. has a unique read on how major disasters such as hurricanes affect consumer spending. Statistics from the Atlanta-based processor show that spending spiked in the Miami area just before Hurricane Irma made landfall in Florida Sept. 10, then plunged 57% from year earlier levels.
In the Houston area, parts of which were drenched with more than 50 inches of rain from Hurricane and then tropical storm Harvey in late August, retail sales in the week of Aug. 25-31 dropped nearly 59% versus the week before, and total consumer spending fell 42.5%.
The figures come from analysis by First Data’s Information & Analytics Solutions unit. For Irma, staffers reviewed consumer payments at 125,343 Florida merchants in 18 industries from Aug. 25 to Sept. 10. The Harvey data derives from purchases at 78,461 merchants from Aug. 13 to Sept. 4. Harvey made its first landfall near Rockport, Texas, on Aug. 25 as a Category 4 hurricane, but did most of its damage later as a weakened hurricane and then tropical storm that wouldn’t go away, producing massive flooding.
In the Miami metro area, the data reflect the hurried efforts by residents to board up and otherwise protect their homes and hunker down, and prepare to evacuate. During week ending Sept. 7, sales of building materials jumped 66.4% from the corresponding week in 2016, and rose 55% from the previous week, First Data said.
At the same time, local gas stations posted sales growth of 63.2% year-over-year, and nearly 51% from the prior week. “Grocery stores were blitzed as well, as spending surged 41% year-over-year, and 21.6% week-over-week,” First Data’s Florida analysis says.
In the days that followed, however, sales at those merchants nosedived. In the Sept. 8-10 period versus Sept. 1-3, building-materials purchases fell 80.2%, and sales at gas stations (many of which ran out of fuel), dropped 75.7%. Total Miami retail sales, excluding building materials, slumped 74.3%, and overall consumer spending fell 57.1%.
Earlier, In the Houston-The Woodlands-Sugar Land metro area of Texas, “Hurricane Harvey created a 30% decline in overall spending year-over-year for the days it wrecked havoc,” First Data’s report on Harvey’s impact says. “Sales eroded by 42.5% during the week of the storm when compared to the week prior.”
Retail sales took an even bigger hit in Victoria, Texas, a town about 125 miles southwest of Houston and close to where Harvey made its first landfall. Total retail sales nosedived 55.2% year-over-year in the week of Aug. 25-31.
Many residents of Houston and the nearby Gulf Coast apparently fled to smaller Texas cities, not just the big ones. Spending in McAllen, Killeen, Waco, and Laredo rose, “while San Antonio, Dallas, and Austin each had comparatively less lift,” First Data said.
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