U.S. consumer situation update in June: spending by all groups declined across the board

It is learned that on June 22, McKinsey's consumer research team ConsumerWise released an update on the US consumer situation. It shows that US consumer confidence continues to rise, but spending has fallen for two consecutive months, and for the first time, spending has fallen across all age groups and income groups.

Research shows that consumer confidence continues to trend upward. According to ConsumerWise's quarterly updated consumer confidence data, since the beginning of the year, the optimism of American consumers has continued to rise, however, overall real spending has continued to decline.

Consumer spending fell across the board for the first time, with mixed performance across categories

According to research, U.S. consumer spending has been on a downward trend since the beginning of the year. In April, actual consumer spending (measured by credit card spending) fell by more than 3% year-on-year, and continued to fall year-on-year in May. Despite the downward trend in spending, the United States has not yet fallen into a recession.

In the retail segment, jewelry saw the largest year-on-year decline in actual spending, down 12%, while sports and fitness categories continued to show resilience, with actual spending up 4% year-on-year. Due to the arrival of summer, actual spending in the travel goods market increased by 2% year-on-year.

In April, the overall real spending growth of U.S. consumers accelerated its decline, and real spending of all age groups and income groups fell year-on-year for the first time since the outbreak. The decline in spending was relatively consistent across all consumer groups, but low-income consumers saw the largest decline of 4.5%.

U.S. consumers did not spend as planned, and actual spending changed

According to research, the willingness of American consumers to spend has not been translated into actual action. A survey in April this year showed that at least half of the Generation Z and millennials in each income group said they planned to spend lavishly, but data showed that actual spending by all income groups that month fell year-on-year.

Category purchase intentions have also changed. McKinsey's consumer confidence survey conducted in early Q2 2023 showed that 38% of respondents were more willing to spend more in restaurants, but actual spending in the restaurant sector fell 3% year-on-year in April. At the same time, actual spending in the travel and outdoor entertainment sectors increased 2% year-on-year in April.

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