Most Consumers Are Watching Their Spending. You Probably Know Why
- 63% of consumers have cut back on spending during the pandemic.
- 21% have been spending more since the pandemic.
- 63% have been living paycheck to paycheck, which is up 10% prior to the start of the pandemic.
- 27% of Americans say they’ve accumulated $10,000 or more in debt during the pandemic
With the holiday shopping season upon us, there has been a debate on whether consumers will spend more or less this holiday season. As with similar discussions, there are prognosticators who take a glass-is-half approach to the debate, and there are others who take a glass-is-half-empty approach.
One thing is for sure, COVID-19 has caused many consumers to take a more cautious approach to how they are spending their money. A new study from Highland, a Chicago-based digital product and innovation consultancy that partners with companies and entrepreneurs seeking to improve financial stability, found that 63% of Americans have cut back on spending during COVID-19 due to a number of reasons, including feeling the need to be more cautious with their finances (60%), experiencing a reduced salary or income (49%) and staying home more often (40%).
In terms of where respondents have cut back on spending, 64% say they are spending less on dining out or takeout, 61% have reduced spending on entertainment such as concerts or movies, 55% are buying less apparel and 52% are spending less on travel, according to Highland.
However, 21% of respondents say they have been spending more since the pandemic. Of those respondents, 51% say they are buying more food or groceries, and 50% are buying more household supplies.
The surveyed revealed that Americans continue to be wary about their job security and income, especially after the unemployment rate spiked to more than 14% in April. According to respondents, more than 25% feel they do not currently have a stable income, and 63% say they have been living paycheck to paycheck since the pandemic.
Highland found that many Americans have taken on new debt as they look to cover their basic needs during COVID-19: More than 25% say they’ve accumulated $10,000 or more in debt, and 42% say they have taken on more debt than they normally would apart from buying a home.
Respondent’s emergency savings have also taken a hit since the pandemic, according to the study. Overall, 47% say they have run out of their emergency savings funds and 67% regret not having enough emergency savings before the pandemic hit.
Most respondents said they don’t expect their household finances to recover anytime soon — 22% don’t expect their households to recover until six months to one year from now.
Most respondents aren’t confident about the government passing a new stimulus bill as only 43% believe that a second stimulus relief bill will be passed, according to the study.
Highland surveyed 2,002 Americans from Oct. 26-Oct. 30. Click here to see the full survey results.