The Financial Times recently reported that consumers are becoming more hesitant to spend following a period of looser spending habits. Retail and consumer goods executives expressed concern about the recent retail spending data, which showed a 0.6% increase in sales from January to February, falling short of economists' projections.
The economy is showing signs of losing momentum, with inflation falling from its peak in 2022 but still experiencing a 3.2% increase in consumer price growth last month, driven largely by price pressures for services. Consumers are feeling stretched and are making trade-offs to meet the needs of their families, according to Christina Hennington, Target's chief growth officer.
The latest consumer sentiment report from the University of Michigan also indicated little change in consumer perceptions about the economy. Many are withholding judgment about the economy's trajectory, particularly in the long term, pending the results of the upcoming election.
The impact of inflation is evident in consumer behavior, with many individuals cutting back on nonessential spending. Research from PYMNTS Intelligence found that 58% of consumers, across all income levels, are making efforts to reduce nonessential spending. Consumers living paycheck to paycheck are particularly affected, with many making tradeoffs between essential and discretionary spending to make ends meet.
Comments