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Insight of the Day: Five Ways Consumers Are Pumping the Brakes on Spending

1. Trading Down

  • Consumers are opting for lower-quality, more affordable alternatives to save money (32.5% of consumers surveyed).

2. Cutting Back on Nonessentials

  • A significant portion of consumers (61.6%) are reducing spending on non-essential items or experiences.

3. Prioritizing Necessities

  • Housing costs and groceries/household supplies remain the top priorities, consuming a large chunk of consumer budgets.

  • Consumers may be cutting back on discretionary spending (like sporting goods or home furnishings) to allocate more money toward essentials.

4. Recognizing the Impact of Impulse Spending

  • Younger generations, particularly Millennials and Gen Z, are more likely to acknowledge that splurging on nonessentials can lead to financial struggles.

5. Utilizing Savings (But with Uncertainty)

  • Savings levels are in flux. While some consumers have increased savings, those living paycheck-to-paycheck have seen their savings decline.

  • Companies report that consumers are becoming more cautious, leading to decreased spending, particularly on everyday items.

Key Takeaways

  • Consumers are becoming more strategic with their spending due to factors like inflation and paycheck-to-paycheck living.

  • Spending reductions are likely to continue as necessities take precedence and savings become a precious resource.

  • Businesses may need to adapt to changing consumer preferences and price sensitivity.

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