Ongoing Inflation to Chill Consumer Spending
In its last consumer behavior report for 2022, Jungle Scout found that shoppers remain concerned over inflation, while an increasing number of those polled see the U.S. heading for a recession in 2023.
The report also revealed where consumers are cutting back their spending — yes, apparel made the list. The survey also gauged holiday shopping season behavior and spending expectations.
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For example, when asked about overall and online spending in the fourth quarter, 77 percent of those polled expected their total expenditures to be lower than the third quarter, while 72 percent said online would be lower.
Researchers at the SaaS solution provider also identified three top-line trends that emerged in the fourth quarter. The first showed the growing importance of social media. “In 2022, nearly 20 percent of U.S. consumers get holiday gift ideas from social media,” the authors of the report said. “Gen Z and Millennial shoppers are more than twice as likely as Gen X and Baby Boomers to buy social media-inspired gifts.”
The other two behavior trends were pegged on inflation and financial stability. “More than 93 percent of consumers are noticing higher prices in their everyday shopping,” the report stated. “As record inflation persists, the majority of American shoppers have adjusted their spending, and a third of those are cutting back on holiday expenses. Consumers will be more focused on financial security in 2023. While family and physical and mental health remain top priorities for consumers, their careers and finances are noticeably more important this year.”
Looking ahead, persistently high inflation and a looming recession will remain a thorn in the side of consumer spending. “Economic indicators have been pointing to an impending recession for the better part of 2022, but in October, popular models were predicting occurrence within the next year with 100 percent certainty. The sustained impact on consumers remains apparent in [fourth-quarter] survey data,” the report noted as 80 percent of those polled believe the U.S. is headed for or already in a recession, which is up from 76 percent in the company’s third-quarter report.
The survey found that 93 percent of respondents “have noticed higher product prices in their day-to-day spending,” while 83 percent “say higher prices have curbed spending.” Meanwhile, 51 percent of respondents described their household income as unstable, and 55 percent cited inflation as the top reason fueling their concerns over financial stability.
Consumers said the categories where they’re seeing the biggest increases in price include food, electronics, apparel, cleaning supplies, and beauty and personal care. As a result, higher prices have shaped spending in the fourth quarter and will influence behavior in 2023.
The survey found that 83 percent of consumers polled said inflation has impacted their spending and 69 percent are worried about finances. However, when asked where they’re least likely to cut spending in 2023, the list included dining out, eyelash extensions, video streaming services, visit to nail and hair salons, comfort foods, and coffee.
And when asked about the top guilty pleasures that will remain for 2023, those polled said marijuana, cigarettes, alcohol and vaping. When asked about their overall priorities for the new year, 78 percent said they want to have more fun, while 54 percent want to travel. The report also found that 73 percent of those polled want to spend more time with family, while 45 percent want to change careers or jobs.
