Consumer confidence lowest in past 2 years
Adams et al 6/22. Christina Adams is a partner in McKinsey’s Dallas office, Kari Alldredge is a partner in the Minneapolis office, and Andrew Pitakos is the product manager for ConsumerWise and is based in the Chicago office, ("A monthly update on the state of the US consumer: June 2023,” McKinsey & Company, 6/22/23,https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/a-monthly-update-on-the-state-of-the-us-consumer)//CG
As we head into the summer months, temperatures may be going up across the United States—but consumer spending is going in the opposite direction. In fact, across all age and income groups, consumer spending is lower than it was a year ago.
Consumer confidence
Optimism is trending upward—but spending isn’t. As noted in last month’s update, optimism ticked up among US consumers as the spring season began. (ConsumerWise data on consumer confidence are updated on a quarterly basis.) Yet despite this modest increase in optimism, consumers’ overall real year-over-year spending declined for the second month in a row, as the next chart shows.
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Consumer spending: Real versus nominal
For the second consecutive month, real spending growth was negative versus the prior year. In April 2023, consumer spending (as measured by credit card spending) declined, in real terms, by more than 3 percent versus a year ago; nominal spending was flat. Still, even as spending is trending downward and consumers remain cautious, the country has so far avoided a recession.
Among retailer segments, jewelry retailers saw the largest negative change (–12 percent) in real year-over-year spending. Meanwhile, the fitness retailer segment continued to show resilience, with real year-over-year growth of 4 percent. Heading into the summer, the travel retailer segment is seeing real year-over-year growth of 2 percent, with the steamship and cruise line subsegments experiencing the largest real year-over-year spending increase among all retailer subsegments.
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Real spending, by demographic
For the first time in more than two years, spending declined across the board. The decline in overall real spending growth accelerated in April 2023—and, for the first time since the pandemic, the change in real year-over-year spending entered negative territory across all age and income groups. The rate of decline was relatively consistent across demographic groups but was steepest—at –4.5 percent—among low-income consumers.