Analyzing households' consumption in Russia through cyclicality

Abstract

Subject. The economic position of households is determined by expenditures out of public income. The standard of living of people correlates with phases of the cyclical development of economy. Objectives. We examine the consumption in Russia, considering the nominal and real income of the Russian people, expenditures incurred for the ultimate consumption. We also trace how standards of living change, as well as trends in the consumer demand in Russia during the economic crisis. Methods. Studying households' consumption in Russia given the economic cyclicality, we applied methods of logic and statistical analysis. Results. As the crisis aggravated in Russia during the coronavirus pandemic in 2019–2020, Russia's GDP insignificantly decreased by 3.1 percent, however households' consumption dropped by 8.6 percent. The consumer demand was found to distort in Russia, as people consumer less non-food products and tend to decline expensive food products. Such consumption trends stems from a decrease in income and, consequently, expenditures as people working as employees have their salaries cut and jobs become more scarce during the COVID-19 pandemic. Conclusions and Relevance. It is vital to bring the economy to its recovery and raise the standard of living by developing the middle class, which considerably shrank during the pandemic. Negative trends in people's wellbeing somewhat preserved macroeconomic indicators of the Russian economic development, since net export increased, currency remained within the countries because people mainly spend less on food and traveling. However, the Russian policy for economic development should pursue interests of the people, whose standard of living should be a priority.