Nearly all Americans are cutting back on their spending in some way, according to a new survey by CNBC and Morning Consult.
The survey found that 92% of Americans are pulling back, further proof of what retailers like Walmart, target, Home Depot and Best buy called as cautious changes in consumer spending during the first quarter.
Shoppers continue to report that inflation is putting a strain on their finances, with concerns especially growing among middle-income Americans. Of the survey respondents, 92% of middle-income Americans — or those making between $50,000 and $100,000 a year — said they were “somewhat” or “very” concerned about higher prices.
That’s a higher proportion than the low- and high-income groups, with 88% of each of those segments reporting concerns about higher prices. One somewhat bright spot: That share of high-income households, represented by those making $100,000 or more a year, represents an improvement from a year ago, when 96% expressed concern about inflation, according to the survey.
A woman looks for products in a department store in New York, on January 26, 2023.
Leonardo Munoz | Corbis News | Getty Images
Over the past six months, higher prices have led nearly 80% of consumers to cut back on non-essential items such as entertainment, home decor, clothing, appliances and more, the survey found.
Additionally, two-thirds of respondents said they are spending less on essential items such as groceries, utilities and gas. In the grocery category, more than half of consumers said they buy cheaper alternatives, such as private label brands, or just buy less in general.
“Customers continue to look for value given the impact of inflation,” Walmart CEO Doug McMillon said at the retailer’s address. profit for the first quarter call. “Private label penetration increased 110 basis points at Walmart US over last year.” A basis point is one-hundredth of a percentage point.
According to Bank of America aggregate credit and debit card spending data, spending at value grocers outpaced spending in the entire grocery segment in May.
“We think this reflects a decline in trade due to higher revenue, consistent with commentary from Grocery Outlet and Walmart,” Bank of America Securities analyst Robert Ohmes said.
In addition, consumers do not expect to change their spending habits for the rest of the year.
Two-thirds of respondents to a CNBC and Morning Consult survey said they still plan to cut spending on essential items in the next six months, and 77% plan to cut spending on non-discretionary items, just slightly below those who said they have already cut back in this area.
The CNBC and Morning Consult survey was conducted online earlier this month and surveyed more than 4,400 adults.
Category showing recall
Among the categories hardest hit by inflationary spending cuts, apparel came in as the No. 1 non-essential category where consumers cut back, with 63% saying they are buying less from the start of 2023.
Walmart and Target, the nation’s largest cross-category retailers, each reported weak apparel spending in the first quarter.
A woman looks for products in a department store on January 26, 2023 in New York City. US gross domestic product increased by 2.9% year over year in the fourth quarter of 2022.
Leonardo Munoz | Corbis News | Getty Images
While experiential spending – particularly travel – has held up better than merchandise purchases this year, the survey found that spending at bars and restaurants was the second most likely non-essential category to see cuts, with 62% saying they were spending less.
Monthly aggregate restaurant spending slowed in May from April, according to Bank of America credit and debit card data. The “fast casual” segment continued to slow spending, “casual dining” saw fewer dollars than a month ago, and pizza in particular continued its year-over-year decline.
Spending on out-of-home entertainment, including concerts, fared slightly better, with 58% of consumers saying they cut back, according to a CNBC-Morning Consult survey.
Meanwhile, more than half of Americans say they have cut back on major household expenses, such as renovations or appliances.
“We’re seeing more of a ‘break, fix, replace’ rather than an upgrade [in appliances] and a little bit of sensitivity to these higher-priced stand-alone items,” said Home Depot CEO Ted Decker he told CNBC ahead of its investor day on Tuesday.
And nearly half of survey respondents said they cut spending on electronics, such as computers and phones, by shopping in that category less often. The decline was even more pronounced among lower-income Americans, with two-thirds of the group cutting back in that category.
Best Buy CEO Corie Barry said after the company’s announcement first quarter earnings report that customers make compromises.
“Not every industry is seeing exactly the same customer behavior because the customer is in control and making trade-offs based on how this inflation affects them personally,” Barry said.
– CNBC Harriet Taylor contributed to this report.
Correction: This story has been updated to correct that 96% of high-income households expressed concern about inflation a year ago, according to a CNBC and Morning Consult survey. In an earlier version, the percentages were wrong.