United States

Adapting to tomorrow's consumer

What do they want, when do they want it and at what cost?

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Consumer spending patterns are evolving differently than in past cycles; it has not been and will likely not be business as usual for the balance of the decade. A low rate of employment growth could continue to impair income growth; however, there appears to be a number of factors that have altered secular spending trends. Consumer confidence is more or less in line with historic norms, although recent data suggest increased concern and uncertainty, which is not that surprising when considering political and international concerns. Interestingly, economic uncertainty does not appear to be one of the top concerns, although it appears to be holding back investment spending by businesses, which, in turn, tends to hold down increases in payrolls.

There are noticeable changes underway. Several factors appear to be impacting spending trends. Retail sales have continued to be disappointing across many consumer products categories. Employment remains on the rise, as are personal income and the savings rate; on the other hand, the number of people unemployed is at a high level, and the number of people seeking employment is low, perhaps reflecting fewer desired job opportunities. Weather and the strong dollar (impacting tourist business) were most often mentioned as contributing factors to struggling sales throughout 2015, as well as the usual commentary about lack of fashion newness. However, consumer spending on automobiles and other durables has experienced better sales trends.

Demographics are likely to be having a significant impact on spending patterns, as the aging population appears to be more focused on health and related items, and to a lesser extent, frivolous luxury products. On the other hand, millennials have a much different set of spending priorities than their elders. They appear to be more concerned with the environment and experiences, rather than material status; most evident is their lack of interest in logo product in favor of merchandise that reflects their self-expression. 

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