The COVID-19 epidemic imposed an economic shock on economies worldwide. With lockdown and businesses forced to close or with capacity restrictions, consumer spending habits drastically changed. Although e-commerce has boomed—Amazon thrived during the pandemic—U.S. consumer prices dropped. From January to May 2020, the CPI dropped from 2.5% to 0.1%.
However, aided by massive fiscal stimulus and effective vaccines, the U.S economy is gathering steam once again, and the consumer price index was back up to 2.5% by April 2021. As consumers start spending again, there will be marked competition as manufacturers and service providers try to grab market share. Here are some products that are getting cheaper.
1. Gym Memberships
Before the pandemic, many workouts were subscription-based, but during the pandemic, gyms were forced to close, and people found alternative ways to stay fit using in-home equipment and mobile apps. According to a survey by CNBC, almost 50% of gym members said they did not plan on renewing their memberships post-pandemic. To attract business, then, many trainers are offering free content on social media, and big-name gyms, such as Planet Fitness and Gold’s Gym are offering on-demand workouts for free.
Mortgage rates have hit a new all-time low. According to CNET, both the 15-year fixed and 30-year fixed mortgage rates both declined in April 2021. For variable rates, the 5/1 adjustable-rate mortgage also ticked downward. Although the expected uptick in the economy could stimulate inflation, and mortgage rates are expected to increase a little in 2021, experts do not expect the average rate to go above 4%. The average 30-year fixed mortgage rate was 3.17% in April 2021, according to Freddie Mac.
3. Books and Audio Books
Many stores and restaurants now have apps, and they offer incentives and rewards to their users. For example, Audible, owned by Amazon, is offering thousands of free audiobooks, kids’ books, and novels and books for adults also, with a free trial. Libby is an app that gives access to library books and audiobooks from your phone, usually for free. Users borrow e-books by signing in with their local library card.
4. Fast Food
Perhaps not the healthiest of loyalty perks, fast food chains like Chick-fil-A and McDonalds offer freebies for their app users. Each mobile order with Chick-fil-A goes toward earning a complimentary treat, such as Chick-n-Minis to ice cream cones. McDonald's gives free items to app uses that change each week, for example, a free breakfast sandwich with an order of a McCafe and $2 off any order over $10.
According to NPR, the U.S. hotel industry suffered its worst year ever in 2020 because of the pandemic. Revenue per available room was down nearly 48%, and the outlook for the hotel industry is not expected to improve until 2024, according to the American Hotel & Lodging Association (AHLA). That means that hotels will continue to keep their prices low to stimulate business travelers as well as leisure seekers. Business travel accounts for 60% to 65% of all revenue in the hotel industry, but business conferences have gone virtual during the pandemic, and a report by the AHLA predicts that business travel will still be down 85% in 2021 compared with two years ago.
TVs have been getting cheaper for decades. In 2011, The New York Times reported that increased manufacturing had created oversupply and put pressure on manufacturers and retailers to lower prices. The decreasing price trend has continued. According to the Bureau of Labor Statistics, between 2018 and 2019, the average price of TVs slipped almost 20%.
Demand is down, and Nielsen data shows that people are spending more time holding their phones than in front of their TV sets. With less demand for actual TVs, there’s less reason for manufacturers to price them highly. Also, TV manufacturers are earning revenues in other ways, namely, through advertising. Most new TVs are smart TVs and come with built-in software from either the manufacturer or a third party like Roku. The TV manufacturers reap a percentage of the advertising revenues from the software and third parties.
7. Solar Panels
Better manufacturing, increased plant size, and economic incentives are driving down the cost of solar panels, says a study by Kavlak, McNerney, and Trancik, 2018, published in the journal Energy Policy. According to The Solar Nerd, the price of solar equipment has dropped by 89% since 2010, and prices for solar are expected to continue to drop through the year 2050.
However, the cost of installing solar technology may see an uptick as federal rebates and incentives expire and are not renewed. According to the Solar Nerd, price trends will vary from state to state. Still, the median price of a home solar installation dropped from approximately $57,000 in 1999 to $24,000 in 2019. That’s over 50%. If you are thinking of going solar, do so now, and your return will come sooner.
The Bottom Line
Price trends vary depending on the product and the economy. While some products will go up in price, particularly when an economy is growing, and inflation pushes up prices, other products will see a price decline. Ultimately, price trends reflect changes in lifestyles, technology, public and private investment, and government policies and regulation.