An update on US consumer sentiment: Consumers see a brighter future ahead

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In February, concerns about inflation decreased slightly from the previous quarter, which helped consumer optimism about the US economy reach its highest level in almost two years. Although US consumers felt less pressure to save for an eventual rainy day, 20 percent were still pessimistic about the economy—but this represented the lowest reported pessimism rate since June of 2022 (although consumers were still more pessimistic than they were at the beginning of the COVID-19 pandemic). The following five charts highlight the findings from our latest ConsumerWise research in the United States.

My confidence has gone up when it comes to the state of the economy. There’s been a lot of positive change overall as the stock market has gone up, my personal portfolio has gone up, and we’ve seen more positive talk about the economy. Even spend at my local store seems to be higher.

Male, Gen X, Florida

We’ve been shopping at the grocery store more often to buy things that are healthier for us. And in the process, we get to save money and spend time with each other cooking and eating together. So it’s really a win–win for everybody.

Female, millennial, Ohio

Unlike 2022 and 2023, I’m no longer delaying purchases. Once the new year came, I just started going down my list and buying the things I’ve been planning. It’s all about finding the best deals possible.

Male, Gen X, California

I plan to splurge on myself every now and then. Some of the things I’m most excited to buy are new makeup, new clothes heading into the new season, and even being able to travel to try new foods. I definitely think it’s important to have a healthy balance, and splurging helps to enjoy life a lot more.

Female, Gen Z, Arizona

I’ve gotten really into cooking and like to splurge on cheeses at the grocery store. We definitely cook a lot more than eating out and like to go to specialty grocery stores to buy different ingredients for cooking at home.

Female, Gen X, New York

As inflation figures continue to fluctuate, will consumers continue to gain confidence in the economy and, therefore, continue to express an interest in splurging? Or will higher-for-longer interest rates slow spending? Watch this space for regular updates on the state of the US consumer. Check out our ConsumerWise page, and contact us for data from previous updates or additional insights.


ABOUT THE AUTHOR(S)

Christina Adams is a partner in McKinsey’s Dallas office, Kari Alldredge is a partner in the Minneapolis office, Lily Highman is a consultant in the New York office, and Sajal Kohli is a senior partner in the Chicago office.

The authors wish to thank Isabelle Engelsted, Alex Lequerica, Andrew Pitakos, Tom Skiles, and Eitan Urkowitz for their contributions to this article.


This article was edited by Alexandra Mondalek, an editor in the New York office.

December 15, 2023

Caution heading into 2024

By Christina Adams, Kari Alldredge, Sajal Kohli, and Eitan Urkowitz

US shoppers are keeping a watchful eye on their spending as uncertainty about the world around them persists. Here’s the latest research from our ConsumerWise team.

Despite inflation slowing considerably from its mid-2022 peak, consumers still expressed caution in November about overspending, given lingering uncertainty about the economy and geopolitical tensions. Consumers said they are planning to reduce their overall spend, being more selective in the products they purchase and places they splurge. The following five charts highlight the findings from our latest ConsumerWise research in the United States.

I’m very concerned about the country’s economy, especially over the last year and the last three to six months. We still have very high gas prices. We still have very high prices for food and services and just about everything else, and it makes it harder on people who are retired.

Female, baby boomer, West Virginia

I’ll be spending more on essentials just because prices are up. I don’t intend to buy any more than the usual, but with prices continuing to change, I just predict I’ll be spending more than I do now. This is the general way all prices are right now, and I don’t expect it to change or get better anytime soon.

Male, millennial, Kansas

If I have the option to have the money in my hands and be investing and using it, I’m going to make my money work for me. I don’t want it to just go toward a full payment right away. If I have the option, I’m going to use buy now, pay later. That’s why I use credit cards. I don’t plan to have debt, and I make sure there’s zero interest. That’s what I do.

Male, Gen Z, Florida

Will US consumer sentiment trend up or down as we head into the new year? What will that mean for manufacturers and retailers as they finalize their 2024 strategies? Watch this space for regular updates on the state of the US consumer. Check out our ConsumerWise page, and contact us for data from previous updates, more information, or additional insights.


ABOUT THE AUTHOR(S)

Christina Adams is a partner in McKinsey's Dallas office, Kari Alldredge is a partner in the Minneapolis office, Sajal Kohli is a senior partner in the Chicago office, and Eitan Urkowitz is a communications specialist in the Washington, DC, office.

The authors wish to thank Miranda David, Isabelle Engelsted, Andrea Leon, Alex Lequerica, Andrew Pitakos, and Tom Skiles for their contributions to this article.


This article was edited by Alexandra Mondalek, an editor in the New York office.