Nearly all Americans are cutting back on their spending in some way, according to a new survey from CNBC and Morning Consult.
The survey found that 92% of Americans are withdrawing, further proof of what retailers like walmart, Goal, DIY store And Best Buy called as cautious consumer spending shifted in the first quarter.
Buyers continue to report that inflation is straining their finances, with concerns rising especially among middle-income Americans. Of respondents, 92% of middle-income Americans — or those earning between $50,000 and $100,000 a year — said they were “somewhat” or “very” concerned about higher prices.
That’s a higher percentage than those in low- and high-income groups, with 88% of each of those segments reporting concerns about higher prices. On a slightly brighter note, that share of high-income households, represented by those earning $100,000 or more a year, represents an improvement from a year ago, when 92% were concerned about inflation, according to the survey.
A woman searches for products in a department store in New York City on January 26, 2023. U.S. gross domestic product rose 2.9% year-over-year in the fourth quarter of 2022.
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 goods, such as entertainment, home decor, clothing, appliances and more, the study found.
Furthermore, two-thirds of respondents reported spending less on essentials, 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 simply buy less.
“Customers continue to look for value given the impact of inflation,” Walmart CEO Doug McMillon said during the retailer’s first-quarter earnings call. “Private brand penetration is up about 110 basis points over last year for Walmart US” A basis point is one-hundredth of a percentage point.
Spending in value-oriented grocery stores outpaced spending in the overall grocery segment in May, according to Bank of America aggregated credit and debit card spending.
“We think this reflects the drop in trading from higher incomes, in line with comments from Grocery Outlet and Walmart,” said Bank of America Securities analyst Robert Ohmes.
In addition, consumers do not expect their spending patterns to change for the rest of the year.
Two-thirds of CNBC and Morning Consult survey respondents said they still plan to reduce spending on essential items in the next six months, and 77% plan to reduce spending on non-discretionary goods , a percentage only slightly lower than those who said they have already cut back in that area.
The CNBC and Morning Consult survey was conducted online earlier this month and surveyed more than 4,400 adults.
Categories see pullbacks
Of the categories hardest hit by inflation-driven austerity, clothing came in as the No. 1 non-essential category where consumers have cut back, with 63% reporting buying less since early 2023.
Walmart and Target, the country’s largest multi-category retailers, each reported seeing weakness in clothing spending in the first quarter.
A woman searches for products in a department store in New York City on January 26, 2023. U.S. gross domestic product rose 2.9% year-over-year in the fourth quarter of 2022.
Leonardo Munoz | Corbis News | Getty Images
While experience-based spending, especially travel, held up better this year than purchasing goods, the study found spending in bars and restaurants was the second most likely non-essential category to cut, with 62% choosing indicates spending less.
Monthly total restaurant spending slowed in May from April, according to Bank of America credit and debit card data. The fast casual segment continued its spending slowdown, casual dining saw fewer dollars than the previous month, and pizza in particular continued to decline year-over-year.
Spending on out-of-home entertainment, including concerts, fared slightly better: 58% of consumers reported cutting back there, according to the CNBC-Morning Consult survey.
Meanwhile, more than half of Americans say they’ve cut back on major household expenses, such as renovations or appliances.
“We’re seeing more of a ‘break, fix, replace’ than an upgrade [in appliances] and a little bit of sensitivity to these few, more expensive discretionary items,” Ted Decker, CEO of Home Depot told CNBC ahead of its investor day Tuesday.
And nearly half of respondents said they are spending less on electronics like computers and phones. That decline was even greater among lower-income Americans, with two-thirds of the group cutting back in the category.
Corie Barry, CEO of Best Buy, commented on the company’s first-quarter earnings report that customers compromise.
“Not every industry sees the exact same customer behavior, because the customer is in control and making trade-off decisions based on how that inflation affects them personally,” said Barry.
– CNBC’s Harriet Taylor contributed to this report.