How recession news has affected consumer spending [Data]

If you’ve watched the news lately, it seems that recession prone Everyone’s attention has been drawn.

A woman plans her next marketing strategy considering how recession news has affected consumer spending

Americans have already seen signs like inflation in rents, gas prices, groceries, and other necessities that pre-existing wages can’t meet. But still some experts say that we can still avoid recession — and if we don’t — a recession may not last as long as 2008.

With all of these changes and news in mind, business decision makers may wonder how their potential customers are responding. And, if their spending habits might change in the near future?

Download Now: 2022 State of US Consumer Trends Report

While we don’t know if we’ll head into a recession, this post aims to help brands and marketers continue to meet consumers where they are – even in uncertain times.

To give readers an insight into how spending behaviors are changing or may be, we surveyed more than 200 US consumers across all age groups, once in the summer of 2022 and again next winter.

Before we dive in, we’ll briefly explain the concept of recession:

Recessions are a normal part of the business cycle and can be triggered by global economic shocks, changes in consumer confidence, and other large-scale economic changes.

But this year, in particular, there are a select few factors that have raised concerns about a possible recession, although none have yet been announced or confirmed.

To learn more about the causes of recession and why to be worried about recession in the near future, Check out this helpful post from our partners at The Hustle,

Are we in recession?

According to several sources, including Forbes, we are not currently in a recession.

“Current economic indicators of recession have not yet appeared,” a forbes article Told.

Forbes said there are still concerns that a recession is expected in 2023. While we may not be in a recession just yet, many consumers are considering changing their spending habits.

How consumer spending habits may change today [Data]

1. How has the news of a possible US recession affected your spending habits?

When we asked this question in the summer of 2022, we found that a majority of respondents (30%) were shopping less and spending money more briefly than in previous months (28%).

How a potential US recession has affected your spending habits New survey data: Most spend less

When we asked the same question again next winter, we found that 30% of respondents said they were shopping less because of a potential recession, and 24% said they were spending money more conscientiously than in previous months. have been

We also saw that the number of respondents who said news of a possible recession could affect their spending increased from 13% to 20% between summer and winter. The number of respondents who said the new one hasn’t affected their spending also fell, from 17% to 13%.

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The rising cost of goods and services often causes consumers to be more cautious in splurging, and we’re sure Americans are feeling the effects quickly.

As a marketer or brand leader, now may be a great time to consider discounts, sales, deals or freemium marketing. While people are potentially tightening their wallets, they may still purchase goods, services, or experiences that are economical or provide bang for their buck.

How spending can turn into a recession

when thinking about consumer spending behavior, It is often dependent on external factors, and news of drastic changes in the economy is worth watching for. Below is a distribution of individual consumer decisions and how they would respond to future financial uncertainty or a possible recession.

2. If a recession is announced, how will your household budget change in the first three months of this new financial era?

Unsurprisingly, the majority of consumers polled over the summer (64%) said they would reduce or continue to reduce their household budget if a recession were to be announced.

How spending may change due to recession: Most people will reduce their household budget to some extent

By winter, this percentage dropped to 57%; However, only 27% said their budget would stay the same and only 15% said it would increase at all.

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Inflation hit till November 2022 7.1%, But, the salary is not increasing in line with these changes. Naturally, the public is already looking for ways to avoid breaking the bank — by slashing their budgets.

If you market B2C brands or products that will be used exclusively in the home, this is important to keep in mind while financial uncertainty continues. While you shouldn’t panic with just one small survey and change your entire marketing strategy, you may want to consider strategies such as marketing your most affordable, discounted, or essential products over high-value or luxury items.

3. During uncertain financial times, what have you spent the most money on?

We asked consumers to reflect on their purchasing behavior in past economic eras with the question, “During uncertain financial times (such as the last recession or during the COVID-19 pandemic), what did you spend the most money on?” “

Survey polling indicates that consumers are spending money on basic necessities and less on pleasures during uncertain financial times.

When surveyed in both summer and winter, the most prominent items consumers have purchased in uncertain times are generally considered basic necessities.

  • essential groceries and food
  • rent, mortgage, housing bill
  • essential personal care products
  • medicine and health

The data shows a shift in self-preservation and it is no surprise that shopping for pleasure has led to less or less risk-taking. By eliminating costs for leisure or entertainment, people can ensure that their families are taken care of before taking their dollars to start a business, take a trip to the movies, or invest in an unpredictable market.

Good News? This does not mean a complete halt to retail, entertainment or other non-essential services. Around 10% still plan to invest in digital or online entertainment, around 9% will still invest in restaurant and bar outings as well as education and learning, and over 16% will invest in clothing and apparel, So, unlike with the pandemic, we probably won’t see the entire economy completely shutting down for months at a time.

How the coming recession could be different from 2008

There are significant differences between this recession and 2008, mainly in its cause and its projected duration.

According to Morgan StanleyThe potential recession will be largely pandemic-induced and debt-driven.

The fiscal and monetary stimulus related to COVID contributed to inflation and fueled speculation in financial assets. it’s very different from great recession of 2008,

The 2008 recession was caused by an excess of debt in housing infrastructure, which took the economy nearly a decade to absorb. In contrast, excess liquidity, not debt, is the most likely catalyst for a recession today.

Due to difference in causes, IMF experts predict there could be a new recession small and shallow,

Additionally, 58% of respondents said their spending habits would be the same as they were during previous uncertain times such as COVID-19, the 2008 recession, or times of individual financial uncertainty.

Key Takeaways for Businesses in 2022

As marketers, we are not experts on the financial markets and should not be viewed as a source of investment, human resources and legal advice. And one never knows for sure when or if a recession will hit.

It is also to bear in mind that although the results above can certainly help you with marketing your brand, they are only a part of a small survey and a brief look in the eyes of consumers. Before making any major decisions about your marketing department, expenses or business, you should definitely do your research, analyze multiple data points and consult with experts in your industry.

While your decisions should be based on a deep dive into the data, the survey results above show that marketers should be mindful of how their efforts may need to change with changing consumer needs or trends. .

Here are some takeaways to keep in mind.

  • Today’s recession may not be like 2008. While consumers are likely to tighten budgets and seek products that provide the most value for their dollar or need, they may not be in disadvantageous financial situations. They can still be persuaded to buy a great product being marketed to them in the coming months.
  • Market your product’s affordability, value and/or need: As consumers and businesses tighten their budgets, it will be more difficult to make sales, retain customers and persuade people to buy non-essential products. Make sure you are marketing that your product has added value or importance apart from being attractive, trendy or cool.
  • Marketers may wish to explore more cost-effective strategies. (Consider reducing additional advertising spend and focusing on organic social, SEO or email marketing instead.)

Remember, financial uncertainties – and recessions are common, And while it may be more challenging to win over customers in the coming months, businesses and consumers will keep going (and buying) even as we wait for the cycle to turn.

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