Consumers are growing more hesitant to spend following a long stretch of looser spending.
That’s according to a Saturday (March 16) report by the Financial Times (FT), citing comments from retail and consumer goods executives in the wake of recent retail spending data.
That data, from the U.S. Census Bureau, showed sales increasing 0.6% from January to February, falling short of economists’ projections of 0.8%.
“We did not begin the year with healthy robust consumer spending that we had at the end of last year,” Steve Ricchiuto, chief economist at Mizuho Securities, told the FT. “The economy is losing some momentum.”
While inflation has fallen by about two-thirds from its peak in the summer of 2022, consumer price growth saw an unexpected 3.2% increase last month, the report said, a trend largely driven by price pressures for services.
“Consumers say they still feel stretched,” Christina Hennington, Target’s chief growth officer, said during a recent earnings call. “They are balancing a lot and having to make trade-offs to meet the needs of their families. … We expect consumers will remain highly value conscious.”
Last week also saw the release of the latest consumer sentiment report from the University of Michigan, which showed things little changed from the prior month.
“Consumers perceived few signals that the economy is currently improving or deteriorating,” said Surveys of Consumers Director Joanne Hsu, reflecting on the data in the statement that comes with the report. “Indeed, many are withholding judgment about the trajectory of the economy, particularly in the long term, pending the results of this November’s election.”
The impact of inflation on consumers — especially the 60% of Americans living paycheck to paycheck — can be seen in recent PYMNTS Intelligence data that found that 58% of consumers, across all income levels, say they are cutting back on nonessential spending.
The research found that almost half of U.S. consumers earning more than $100,000 per year say they cut back on nonessential spending whenever possible.
As many as 61% of consumers who make less than $50,000 each year and nearly two-thirds of those earning between $50,000 and $100,000 annually do the same.
“Of the paycheck-to-paycheck consumers who say that they have at least some challenges paying their bills, more than two-thirds say that they are making tradeoffs between ‘essential’ and ‘nice to have’ spending,” PYMNTS wrote.