New York – In its recent Economic Event Sensitivity Survey, the Innovating Commerce Serving Communities found that inflation is the predominantly economic concern among adults at present, with 50% saying it has impacted their financial situation over the past 24 months.
The survey also found that a plurality of Gen Z (49%) and Millennials (47%) indicated their financial situation had improved in the past year, suggesting these groups will be critical in continuing the economic recovery of the pandemic.
Two years since the start of the pandemic, the survey found that 39% of consumers overall report that their financial situation has worsened, and these consumers are now experiencing additional worries around higher prices on essential items. However, concern is not only limited to just those in a worse financial position as 82% of adults report being impacted by price changes for groceries, 76% on utilities and 75% on gasoline, all of which have seen significant recent spikes.
While most consumers (77%) let their personal circumstances rather than the overall economy dictate their spending, those who might face economic hardship are ready to cut costs starting with dining out (64%) and entertainment (54%). Consumers indicated they are likely to spend more on high quality groceries (52%), dining out (41%) and saving (40%) should their personal financial situation or perception of the economy improve.
“While recent retail sales figures demonstrate consumer optimism, consumers are also acutely aware of the need to shift their spending with shifts in the economy,” said Tom McGee, president and CEO of ICSC. “Retailers will need to find ways to continue serving price-conscious consumers while expanding their offerings as pandemic-related restrictions and fears decrease.”
Consumers identified retail prices (77%), energy and gasoline prices (69%), employment status or wages (59%) and personal debt (59%) as factors that have the greatest impact on their expenditures or spending habits. Interestingly, only 35% of consumers cited the stock market and their personal 401k plans as drivers of their spending habits.
While only 37% of consumers cited geopolitical issues around the world as a factor that impacts their spending, the current conflict in Ukraine is likely to add to inflation and impact consumer perception.
The ICSC survey found that 80% of adults saved money during the pandemic, including 92% of Gen Z and 84% of Millennial respondents. Those who saved noted they intended to continue saving that money (49%), use it to pay down debt (34%), or use it for retirement (26%). Perhaps as a result of increased saving rates, many consumers (63%) feel prepared to manage their household’s finances in the event of economic downturn.
“The past two years have been challenging and unprecedented for American businesses and consumers, and issues like inflation continue to weigh on consumer spending even as many Americans are financially better off than they were before the pandemic,” said McGee. “Still, we remain confident in the broad trajectory of the economy, and the Marketplaces Industry is poised for success in 2022 as, to date, consumer resilience has outpaced these concerns.”
The 2022 ICSC Economic Event Sensitivity Consumer Survey was conducted online from Feb. 18-20. The survey represents a demographically representative sample of 1,007 respondents. This survey was conducted prior to the Russian invasion of Ukraine and does not reflect its impact on consumer perception and inflation.
Erica Hawbaker, associate editor for Furniture Today, is a recent graduate of the University of Iowa, with a degree in English and a writing certificate in publishing. In addition to bringing her writing talent to the editorial team, Erica will add her late-Millennial perspective.
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