Are Americans getting ready to hit the brakes on spending?
American consumers, for the most part, have continued spending along established patterns despite encountering higher prices for the staples of everyday life driven up by inflation. That, however, may be in the process of changing — research from a variety of sources shows that many people are having to adjust their spending to stretch their disposable dollars.
A new survey from American Consumer Credit Counseling of households earning $100,000 a year or less finds that 93 percent have personally felt the effect of higher prices on everyday items. More than 30 percent have made changes to reduce what they spend on fuel. Nineteen percent have cut back grocery purchases. More than half of canceled or modified travel plans for the summer.
“This surge in costs across just about every category of consumer goods is a significant burden on American households,” Allen Amadin, president and CEO of American Consumer Credit Counseling, said in a statement. “Discretionary spending is generally the first thing to be curbed during times of financial crisis. When people are forced to buy fewer groceries or change their commuting habits, we have entered an entirely new level of challenge.”
New research from LendingClub Corporation and PYMNTS finds that 64 percent of Americans are currently living paycheck to paycheck. This could lead consumers to take on greater debt, which would further restrict their ability to spend down the road.
“The number of people living paycheck to paycheck today is reminiscent of the early days of the pandemic and it has become the dominant lifestyle across income brackets,” said Anuj Nayar, financial health officer at LendingClub. “As inflation we have not seen in a generation takes more of our paychecks for everyday needs, Americans across incomes and credit scores are increasingly relying on credit products just to get by.”
Malt-O-Meal, the value-priced bagged cereal brand, also released research that shows price is becoming critical to purchasing decisions. Seventy-one percent of respondents said they are more likely now to shop on a budget than prior to the pandemic. Households with children are 21 percent more likely to do so than those where no kids are present.
Fifty-three percent of those surveyed are buying value brands to stretch their grocery purchases. Forty-five percent are shopping using a sales flyer and 43 percent are making use of a store’s rewards app.
- American consumers curbed spending on both necessities and discretionary activity as inflation surged in first quarter – American Consumer Credit Counseling
- 2/3 of the U.S. Population Now Lives Paycheck to Paycheck – LendingClub Corporation/PRNewswire
- As Grocery Prices Surge, New Malt-O-Meal Survey Finds Nearly 3 in 4 Consumers Likely to Purchase Foods from Value Brands as They Prioritize Quality and Affordability – Malt-O-Meal/PRNewswire
DISCUSSION QUESTIONS: Do you think the point has been reached when a large percentage of Americans are going to significantly change how they shop to save money? How will this affect retailers that sell products that fall under the discretionary spending category?