US consumer confidence rises to 41% in Q3 2024

It is learned that McKinsey's ConsumerWise team recently conducted a consumer confidence survey of about 4,000 American consumers in Q3 2024. The survey showed that American consumers' confidence in the economy has improved, and the proportion of optimism about the strength of the US economy has increased from 33% in the previous quarter to 41%, reaching the highest level in the past year.

Despite the rise in consumer confidence, consumers' spending behavior still shows a paradox of caution and extravagance. The survey found that high-income earners are more optimistic about the economy than middle- and low-income consumers, and young consumers (especially Generation Z and millennials) are significantly more optimistic than older consumers.

The survey also showed that male respondents were more optimistic (47%) than female respondents (37%), with male respondents expressing optimism about the improvement in the job market in the third quarter, while female respondents expressed concerns about the balance of payments.

Despite the continued decline in inflation rates, 53% of respondents remain concerned about price increases and inflation, but 37% of consumers feel more optimistic because inflation has stabilized.

On the spending side, consumers plan to increase spending on most essential, semi-discretionary and non-essential items over the next three months. However, as summer ends and fall arrives, consumers will spend less on categories such as fresh produce, home improvement and gardening supplies.

The survey shows that consumers (especially Generation Z and Millennials) are still highly sensitive to prices, and low-income consumers downgrade more frequently than high-income consumers. 76% of consumers said they would downgrade in the third quarter to seek better value for money, with Generation Z and Millennials accounting for 86%. Nearly 50% of young consumers said they changed retailers for lower prices or discounts, up from 44% in the previous quarter. The downgrade rate of Generation X is lower than that of Generation Z and Millennials (76%).

Meanwhile, use of buy now, pay later services increased in the third quarter compared to the second quarter, with a higher percentage of middle- and upper-income consumers using buy now, pay later services (18% vs. 15%, respectively). Gen Z and Millennials use buy now, pay later services at an above-average rate, while baby boomers use them less frequently.

While consumers reported a decrease in spending, they also indicated an intention to splurge. Compared to the previous quarter, 42% of senior spenders and 38% of younger consumers indicated an intention to splurge, but lower-income Gen Xers and middle-income baby boomers reported a decrease in intentions to splurge. This spending behavior may be related to the ongoing financial pressures consumers are experiencing, with many seeking to treat themselves through spending, even as inflation continues to weigh on budgets.

When it comes to dining out, consumers’ planned spending remains stable (40% in Q3 vs. 39% in Q2), while higher-income consumers intend to spend significantly more on travel than on groceries.

Female respondents in particular said they will prioritize beauty and personal care spending over the next three months, with 59% of high-income Gen Z women planning to spend in this area, up from 33% in the second quarter. While men are more inclined to spend on food and beverage, high-income Gen Z men's spending intentions on food and beverage have dropped significantly to just 30% (51% in the second quarter), while only 38% of high-income female baby boomers plan to spend on food and beverage, down from 52% in the second quarter.

Overall, U.S. consumers' willingness to consume increased in the third quarter. However, external economic uncertainty remains a concern and may pose a challenge to future consumer behavior, especially under the influence of the upcoming U.S. election and ongoing global geopolitical conflicts.

Author✎ Summer/
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