The Harris Poll’s Post

US consumer confidence dipped in Q2 2024 to levels last seen at the end of 2023 due to inflation and economic concerns. This decline is already influencing spending habits, with consumers splurging selectively while cutting back in other areas. Looking ahead, continued economic pessimism and inflation may drive further shifts in consumer behavior, particularly among younger generations. #ConsumerTrends

US consumer spending plans plateaued in Q2 amid declining economic optimism, depleted personal savings, doubt over the labor market, and inflation concerns.    But there is still intent to splurge across all age groups, particularly on dining out, groceries, and apparel.     Notably, Gen Zers and millennials are more inclined to spend on beauty and personal care, apparel, and jewelry. Meanwhile, Gen Xers and baby boomers are more prone to splurge on groceries and travel.    Our ConsumerWise team has the detail here, with powerful insights for CPGs to navigate a potentially meaningful shift in consumer spending plans. Thanks to Becca Coggins, Christina Adams, Kari Alldredge, and Warren Teichner.    #Consumer #CPG #B2B2C #Pricing #ConsumerInsights  

Shoppers are becoming more deliberate with their purchases, yet studies reveal that 70-88% of consumers still admit to making impulse buys. RETAILERS: Are you adjusting your marketing strategies to engage these more intentional customers? And how are you turning impulse buyers into loyal repeat customers? I'd like to learn more. #Retail #Marketing #CustomerEngagement #DSCID #ImpulsePurchases

💡 How has consumer spending behavior changed? 👉 Consumers are financially better off in 2024 due to a resilient labor market, solid wage growth, and cooling inflation, easing household budgets. Despite this positive outlook, consumers remain cautious and skeptical, maintaining careful spending behaviors. #ConsumerBehavior #EconomicTrends #SpendingHabits #MarketInsights #FinancialWellbeing #ConsumerTrends #RetailStrategy #COVID19Impact #Inflation #WageGrowth #BusinessStrategy #MarketResearch #GlobalEconomy #BrandStrategy

There are increasing signs that shoppers are rethinking their spending plans, despite recent signs of consumer price inflation, or CPI, starting to ebb. For example, in the latest July survey, the New York Fed's Survey of Consumer Expectations median expectations for year-ahead spending growth fell from 4.9 percent in July versus 5.1 percent the previous month. In fact, this continues a declining trend in spending growth expectations that started in May 2022, when the median response peaked at 9 percent. John O'Trakoun, senior policy economist, looks at some of the survey evidence that consumers are starting to pull back on spending. Learn more in this week's Macro Minute, the weekly blog that explores the numbers behind the headlines on the national economy: https://bit.ly/3X9ZraH #MacroMinute #HouseholdSpending

Latest Fed research finds it’s middle and high-income households driving the consumer spending, while low income spending has been flat. This discrepancy is largely overlooked by the market. However, it has huge implications for monetary policy making. I think, Chair Powell demonstrated that he takes this issue seriously by cutting the rates more than market expectations in the last meeting.

After a two-year high in US consumer optimism during Q1 2024, Q2 saw confidence fall to its lowest level since late 2023.     This analysis by our ConsumerWise Team points to a potentially meaningful shift in consumer spending, driven by depleted personal savings, doubt over the labor market, and inflation concerns. Expectations among consumers that their spend will grow on essentials – particularly gasoline – mean they are set to cut back on travel, home improvements, and fitness and wellness.     Despite trading down, there is still intent to splurge, especially among Gen Zers and millennials. Across the board, the hospitality sector looks set to benefit most here, but there are interesting variations by age group.     There is more on the nuances of this shift, across generations and income bands, here. It’s a good read for consumer leaders.     #ConsumerInsights #ConsumerGoods #CPG #Retail #B2B2C   https://lnkd.in/gf5imvEq

Surveys of Consumers Director Joanne Hsu Consumer sentiment soared 13% in January to reach its highest level since July 2021, showing that the sharp increase in December was no fluke. Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations. Over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended. For the second straight month, all five index components rose, with a 27% surge in the short-run outlook for business conditions and a 14% gain in current personal finances. Like December, there was a broad consensus of improved sentiment across age, income, education, and geography. Democrats and Republicans alike showed their most favorable readings since summer of 2021. Sentiment has now risen nearly 60% above the all-time low measured in June of 2022 and is likely to provide some positive momentum for the economy. Sentiment is now just 7% shy of the historical average since 1978. Year-ahead inflation expectations softened to 2.9% after plunging in December. The current reading is the lowest since December 2020 and is now within the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations edged down to 2.8% falling just below the 2.9-3.1% range seen for 26 of the last 30 months. These expectations remained slightly elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.

“The mood of U.S. consumers turned negative in May as their expectations for inflation moved upward.” “The University of Michigan Index of Consumer Sentiment posted a preliminary reading of 67.4 for May, down from 77.2 in April and its lowest reading in six months. The move represented a one-month decline of 12.7% but a year-over-year gain of 14.2%.” “Consumers’ view of current economic conditions fell 12.9% to 68.8 in May, down from 79.0 in April. The expectations index decreased 12.5% to 66.5, down from 69.4 the previous month.” “The trend in sentiment is characterized by a broad consensus across consumers, with decreases across age, income, and education groups, she added. Consumers in Western states exhibited a particularly steep drop.” “Year-ahead inflation expectations rose from 3.2% last month to 3.5% this month, remaining above the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations inched up, from 3.0% last month to 3.1% this month.” “Although they have been within the narrow 2.9-3.1% range for 30 of the last 34 months, long-run inflation expectations remain elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.”

“Our analysis and inflation adjustment likely undercounts the extent to which low-income households experienced inflation”. (“Fed Notes….’A Better Way of Understanding the US Consumer: Decomposing Retail Spending by Household Income’”) Looking at the metrics compiled by the authors retail consumption peaked circa Q1 2021. Then noticeably reduced by close of Q2 2021. This reflects the effect of massive stimulus injection into the economy via the consumer. The reduction was induced by a distressed supply chain creating shortages and higher prices consequent the impact of “scarcity” via classical “supply vs demand.” In “normal” circumstances a disinflationary trend should have initiated by Q3 2021. However, due to the explosion of (stimulus provided) liquidity, there was still too much “money, chasing too few goods.” It can be argued (after the fact) this is an inflection point where inflation transitioned from “transient” to “persistent.” However, this wasn’t recognized (at that time) due to lagging data, and traditional economic indicators that were made irrelevant subsequent the unprecedented level of liquidity injection into the economy. Until the abrupt initiation of monetary tightening, monetary (liquidity) supply continued to grow creating an increase in the overall impact of inflation in contrast to available purchasing power. This in turn, required sharper monetary policy adjustments than likely would have been necessary 2 quarters earlier. Again, traditional economic indicators were presenting a different picture of analysis than the objective underlying economic conditions experienced by the consumer directly. Which hindered early monetary policy tightening sentiment. Looking at the data presented in the linked has made me revise my own “personal pet” theory on economic performance being directly correlated by the growth or decline of monetary supply. Now I assert “economic performance is directly affected by the amount of increase or decrease in monetary supply, so long as the “material” supply chain is able to deliver goods and services as desired by demand.” The inability of the supply chain to deliver goods and services in the aggregate increase of liquidity available accelerates inflationary pressures requiring accelerated monetary tightening for sustained periods until the supply chain is able attain sufficiency, equilibrium with demand. The unprecedented availability of stimulus driven liquidity prevented classical “over-leverage” associated with similar historical periods of accelerated inflation that averted a recession or depression caused by the “lockup” of liquidity in the financial system. In short, the cause of the “problem” averted a much bigger problem giving the FOMC more leeway and the benefit of time to gradually slow the economy, tighten monetary supply in order to allow the “supply chain” of goods and labor to equalize using relatively moderate monetary tightening measures.