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Deloitte: Americans Still Aren't Thinking About Spending Like They Did Pre-inflation

Deloitte: Americans Still Aren't Thinking About Spending Like They Did Pre-inflation

Inflation took a toll on spending confidence. Though rates have eased, Americans are likely still acclimating to the daily cost pressure.

Roughly 7 in 10 Americans surveyed say they are still concerned about rising prices for everyday purchases, down only slightly from summer 2022 (83%) – when inflation peaked at 9.1%

Key takeaways

Why this matters 
A consumer’s sense of personal financial well-being likely forms the bedrock for spending behavior — from their approach to budgeting, to what they buy at the grocery store, how they plan their vacations, and when they buy a car. In its fourth year, Deloitte’s “ConsumerSignals” (formerly the Global State of the Consumer Tracker), a longitudinal consumer research study, explores shifts in global financial well-being sentiment and its potential impact on purchase decisions.  

Financial well-being sentiment has plateaued in the U.S. since early 2023
Unlike consumer confidence indices, which often focus on consumer opinion about business or labor market conditions, financial well-being focuses on the consumer’s own financial situation, security and future expectations. Deloitte’s Financial Well-being Index (FWBI) captures change across six dimensions of financial health: 1) ability to make upcoming payments, 2) comfort with level of savings, 3) income relative to spending, 4) delays in making large purchases, 5) assessment of current financial situation relative to the prior year, and 6) financial expectations for the year ahead.

“Despite low unemployment, GDP growth, and solid retail sales numbers, financial and geopolitical anxiety weigh heavily on the U.S. consumer’s psyche. After navigating inflation for two-plus years, consumers’ price expectations are moving slower than moderating inflation rates. Their intention to pull back on nondiscretionary items like groceries underscores the price fatigue and anxiety U.S. consumers feel. Business leaders should adjust their strategies to help rekindle profitable loyalty and volumes.” – Stephen Rogers, managing director, Deloitte Consumer Industry Center, Deloitte Services LP

Americans still aren’t thinking about spending like they did pre-inflation 
Inflation took a toll on spending confidence. Though rates have eased, Americans are likely still acclimating to the daily cost pressure. Deloitte’s Spending Intentions Index measures changes in consumers’ estimated spending for the month ahead across 16 categories. Stagnating financial well-being sentiment is one probable reason why spending intentions have not consistently returned to pre-inflation levels. While maintaining a slight uptrend since May 2023, spending intentions are still yet to fully recover.

Financial well-being following unique paths across the world
Deloitte’s global financial well-being index, an average of eight of the top 10 global economies, suggests financial well-being has been faring better globally compared to the U.S. since the index’s early pandemic April 2020 baseline. However, country-level trends vary. 

Posted by on February 29, 2024.

Categories: Trends

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