Regardless of the industry you operate in, understanding the state of consumer spending can give your company a significant advantage over your competitors. Gaining a better understanding of your customers can help you put together more effective marketing campaigns, develop new products that will better resonate with consumers, or tweak your brand voice to remain current.
With that in mind, let’s explore three key consumer trends in today’s economy.
Today’s consumers have been facing higher-than-expected inflation for years. In the United States, inflation peaked at 9.1% in June 2022. However, it has remained elevated through 2024 at slightly higher than 3%.
Despite this inflation, consumer spending has remained strong over the past few years, defying analyst expectations. However, consumers are finally starting to buckle under the weight of higher prices.
According to an April 2024 study by Deloitte, rising cost pressures—particularly in major categories like housing and energy—are weighing on consumer spending sentiment. In other words, consumers are increasingly resisting higher prices and starting to explore more cost-effective alternatives.
Executives from major companies have already noticed this change and started to tweak their pricing to cater to price-conscious consumers. For example,
That said, this doesn’t necessarily mean consumers are cutting spending altogether. In fact, Deloitte’s study shows that another pandemic-era habit is still going strong.
During the pandemic, consumers showed a strong preference for experiential purchases over product-based purchases—spending on experiences instead of things. This trend is still going strong, according to Deloitte’s April 2024 study, which showed that leisure travel sentiment remains exceptionally strong. Companies might find it easier to coax dollars from consumers by offering unique experiences rather than great products.
The final economic consumer trend to pay attention to is the Great Wealth Transfer.
Over the next two decades, the Baby Boomer generation will pass down roughly $84 trillion to their children and grandchildren – an event known as the Great Wealth Transfer. Economic experts believe that this will be the most significant transfer of wealth of all time.
This trend will take decades to fully play out, so it’s not necessarily something you should bring up at your next meeting. But it’s still a massive trend that your company should be aware of as you develop new products and chart plans for future growth.
Over the coming decades, there will be a massive shakeup in who holds the reigns to the family fortune in households across the country. Millennials and Gen Zers will find themselves in a position where they have more wealth than ever before. And they’ll likely have a much different opinion on how to spend or invest it than their parents did.