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Consumer Spending in a Recession

Posted by: Jena McGregor on April 30, 2009

It should come as little surprise that consumer spending was down in March, the fourth straight month in a row that shoppers reeled in their purchases and held onto their wallets. And if a Boston Consulting Group study released today is any indication, that’s unlikely to change anytime soon. Seventy-three percent of Americans said they planned to cut back on spending in the next 12 months, more than in any other country the strategy consultancy surveyed. In China, meanwhile, just 26% of consumers are likely to trim what they spend.

The survey dove into other consumer sentiments, from how worried employed folks are about keeping their jobs to which direction consumers feel the economy is headed. Just 20% of U.S. respondents felt we’ve hit bottom, with only Japanese respondents (11%) feeling less optimistic.

But the most interesting results showed how consumers’ shopping habits are likely to change as a result of the recession. In the U.S., hypermarkets and discount retailers should gain market share from grocery shoppers. Meanwhile, on a list of spending categories consumers would cut, vacation and travel are the first thing to go in all developing markets. Restaurants and fast food are first in the U.S. (vacation showed up fifth on the list of categories consumers would cut) while fashion accessories were the first thing Europeans would give up (with travel showing up even lower, at sixth).

Also fascinating: Brands look to be meaning less and less for consumers in the U.S., Europe and Japan. Just 27% of Americans and 15% of Japanese said they’re willing to trade up for a better brand, while it was the top reason in India and China, where 79% and 71% of consumers said brands would make them spend more, respectively.

The good news for retailers, if there are any? Consumers were asked if they think frugal lifestyles will last, even after the recession ends. Most were neutral on the issue, with Europeans saying that indeed, they will resume spending as ever before.

Reader Comments


May 1, 2009 11:07 PM

We've been extremely frugal for a few years but we are slowly coming out of it. I guess our frugal ways aren't going to last.

I'm not going to rush out and buy an new vehicle every 2 years like we have done for the past 14 years but we are slowly loosening out belts and spending some money.

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Kate Fennel

October 10, 2009 11:12 AM

It's a bit of a downward spiral situation. As consumer spending drops, the economy weakens and as a result, people decide to spend less.
Extreme Sports Trader


November 20, 2009 9:10 PM

spending is at a low these day for me anyway that is the case, I hope the market goes boom again quickly as the recession is hurting alot of people

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December 22, 2009 5:08 PM

I don't understand why Americans spend so much when they have so little! Why can't they ever learn!

-Phil AKA "The Weight Loss Tips Guru"


March 22, 2010 6:07 AM

Let's learn to spend less... spending less and be contented...

- Thepbanthao @ beach tanning

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