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Consumers to Cut Back on Spending Amid Rising Prices, Survey Shows
When conducting its May consumer confidence survey, The Conference Board asked extra questions about consumers’ budgeting strategies.
Inflation weighed on consumers’ minds for the second month in a row, The Conference Board said when releasing its May consumer confidence survey. More survey-takers mentioned prices and oil and gas in their write-in responses, a signifier they are concerned about the inflationary impacts of the war in the Middle East, The Conference Board said.
New York—Consumer sentiment was essentially flat in May as higher prices persisted, and consumers told The Conference Board they are cutting back on spending because of inflation.
The Conference Board’s Consumer Confidence Index, its monthly, survey-based measure of how consumers are feeling about the economy, was 93.1 in May, down slightly from an upwardly revised 93.8 in April.
Consumers were feeling less optimistic about their current situation but had a rosier view of the near future, the survey shows.
The Conference Board’s Present Situation Index, which measures consumers’ outlook on current business and labor market conditions, fell 3.2 points month-over-month to 121.2. More survey-takers described business conditions as “bad” and jobs as “hard to get” in May.
However, the Expectations Index, which is based on consumers’ outlook on income, business, and labor market conditions six months from now, rose by one point to 74.4.
Two of the index’s three components, net expectations for business and net expectations for labor market conditions six months from now, rose though survey-takers were slightly less positive about expected household income.
Looking at specific demographics, confidence was up among consumers aged 35-54—a mix of Gen Xers and millennials—but trended downward for consumers who are younger than 35 and older than 54.
Consumer confidence also rose among higher-income groups and voters who are registered as Independent.
The Conference Board Chief Economist Dana M. Peterson pointed to the inflationary impacts of the ongoing war in the Middle East as the reason consumer confidence slipped in May.
She said: “Consumer appraisals of current business conditions and the current labor market were moderately less positive compared to last month. This was somewhat offset by modest improvements in consumers’ expectations for business conditions and the labor market six months from now.”
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The Conference Board’s Consumer Confidence Index, its monthly, survey-based measure of how consumers are feeling about the economy, was 93.1 in May, down slightly from an upwardly revised 93.8 in April.
Consumers were feeling less optimistic about their current situation but had a rosier view of the near future, the survey shows.
The Conference Board’s Present Situation Index, which measures consumers’ outlook on current business and labor market conditions, fell 3.2 points month-over-month to 121.2. More survey-takers described business conditions as “bad” and jobs as “hard to get” in May.
However, the Expectations Index, which is based on consumers’ outlook on income, business, and labor market conditions six months from now, rose by one point to 74.4.
Two of the index’s three components, net expectations for business and net expectations for labor market conditions six months from now, rose though survey-takers were slightly less positive about expected household income.
Looking at specific demographics, confidence was up among consumers aged 35-54—a mix of Gen Xers and millennials—but trended downward for consumers who are younger than 35 and older than 54.
Consumer confidence also rose among higher-income groups and voters who are registered as Independent.
The Conference Board Chief Economist Dana M. Peterson pointed to the inflationary impacts of the ongoing war in the Middle East as the reason consumer confidence slipped in May.
She said: “Consumer appraisals of current business conditions and the current labor market were moderately less positive compared to last month. This was somewhat offset by modest improvements in consumers’ expectations for business conditions and the labor market six months from now.”
In May, the Conference Board asked survey-takers extra questions about their budget priorities now and in the next six months.
When asked how they have changed their overall spending habits because of higher prices, 67 percent of survey-takers said they are cutting back while 33 percent said they haven’t changed their spending habits (26 percent) or are spending more (7 percent).
When asked more specifically what they are doing right now to save money, 61 percent of consumers said they are buying fewer items; 50 percent are putting off the purchase of expensive items; and 47 percent are buying things they need, not things they want.
In addition, 47 percent of survey-takers said they were opting for less expensive versions of the things they normally purchase.
When asked how they plan to change their spending habits six months from now, half of respondents said they plan to delay purchases of expensive items.
Forty percent said they will buy the same items with the understanding their overall spending will increase, and 38 percent said they will go for products they need over products they want.
In May, The Conference Board asked survey-takers a special set of questions about their current and future spending habits, including a product-by-product breakdown of their budgets. (Chart courtesy of The Conference Board)
The Conference Board also asked survey-takers to outline their spending plans for the next six months on a product-by-product basis.
The results, which can be seen in the chart above, showed that the main areas where consumers plan to cut back are clothing and footwear—44 percent of consumers said they plan to spend less in this area—hobby items (34 percent), and games and toys (30 percent).
Consumers said they plan to maintain spending on essentials, with pharmaceuticals (64 percent), as well as groceries, personal care products, and household supplies (all 61 percent) ranking as the leading categories for maintained spending over the next six months.
The May consumer confidence survey, conducted for The Conference Board by technology company Toluna, was taken between May 1 and 19.
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