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Consumer Spending Shows Shifts in Spending Power, Priorities

·2 min read

Consumer spending has transitioned from “nice to have” to “need to have” amid higher inflation, climbing costs for fuel and diminished spending power, according to a recent Refinitiv/Ipsos Primary Consumer Sentiment Index.

Fielded from June 24 to July 8, its index that measures American consumer confidence has fallen below the 50-point mark to 49.5 for the first time since December 2020, the company said, falling 3.3 points from last month. Its Retail/Restaurant index declined in back-to-back months, yielding a -7 percent blended estimated earnings growth rate for second-quarter 2022. 

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Thomas Alonso, senior analyst at Refinitiv, said, “Currently, low-income consumers are being squeezed the most in the absence of stimulus checks that last year boosted their cash flow. On top of that, they are facing higher inflation that is diminishing their spending power. Higher fuel prices are also attracting the next tier up — lower‐middle class consumers who are trading down looking for value.”

In sensing these emerging consumer needs, payment companies such as American Express have toiled to create solutions that reflect said shifts. Based on its own research that indicated consumers’ top spending categories and newish habits, the firm recently refreshed its Amex Blue Cash Everyday card to give 3 percent cash back on purchases for U.S. online retail purchases, supermarkets and gas stations.

In observance of consumers spending more time at home and prioritizing necessities and creature comforts, it also offers monthly statement credits for Home Chef and subscriptions to streaming services such as The Disney Bundle. And its research also found that consumers are craving rest and relaxation, as the majority of adults, at 80 percent, wish they had more time to spend with their friends and family on weekdays, and 68 percent of adults agreed that streaming movies or shows is one of their favorite ways to spend time with friends and family, the company said.

More time at home, for most of us, means increased time spent perusing products online. James Berry, vice president, U.S. Proprietary Lending Product Management at American Express, told WWD, “People have turned to online shopping for its value and convenience, so we created a new U.S. online retail category to reward card members for these purchases. According to our research, 90 percent of consumers surveyed want a credit card that gives them cash back for their everyday purchases, and now we can give them exactly that.”

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