Survey: US Consumers Are Feeling Better Financially, and Ready to Spend on Products, Services, and Investment

New US Consumer Dynamics Report Provides Quarterly Snapshot of Consumer Concerns, Spending Priorities, and Financial Health

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The Conference Board

Jul 29, 2021, 13:00 ET

NEW YORK, July 29, 2021 /PRNewswire/ -- Buoyed by vaccinations, widespread economic reopening, and a new round of government stimulus, American consumers reported spending more—and cutting back less—across a range of categories in the second quarter of 2021. According to the US Consumer Dynamics Report: Q2 2021, part of a series drawn from The Conference Board® Global Consumer Confidence Survey, just 8 percent of respondents had no spare cash to spend in Q2—down from 17 percent in Q1.

While 54 percent still report cutting back on expenses in Q2, that proportion was down from 62 percent in Q1 and 64 percent a year ago. Meanwhile, the share of people spending disposable income on discretionary categories was up sharply, especially for services such as vacations/travel and out-home entertainment, but also for clothes, home improvement, and technology. At the same time, investing in stocks/mutual funds—a trend that coincided with less spending during the pandemic as well as stimulus payments—continued to climb as other spending opportunities reopened.

"Overall, Q2 saw US consumers' pandemic-fueled concerns about health, the economy, and job security ease," said Denise Dahlhoff, Senior Researcher at The Conference Board. "At the same time, people's worry about climate change, which was temporarily eclipsed by pandemic-related concerns, has resurfaced. Given extreme weather events across the world, this concern may continue rising going forward, challenging companies to enhance and accelerate their sustainability agenda and collaborate with industry peers—and governments—to find solutions."

Among the key insights from the US Consumer Dynamics analysis:

Climate is rising on the list of consumer concerns, as worries over the economy, health, and job security wane:

16% of consumers named the economy their top concern over the next 6 months—still the highest overall, but down 9 ppts compared to Q1. The proportion naming health (14%) and job security (9%) their top concerns also fell in Q2, by −4 ppts and −1 ppt, respectively.
Climate concerns have risen. Global warming was the top concern of 7% of US consumers in Q2—up 2 ppts over Q1 and 4 ppts YOY. This aligns with renewed government focus on climate.
The shift toward climate in the US is mirrored elsewhere around the world. In Germany, 12% of consumers named global warming their top concern in Q2, +5 ppts over Q1. Japan, Italy, Vietnam, Singapore, and Mexico all posted +3 ppts gains in the proportion of consumers prioritizing climate. Efforts around sustainability may increasingly take center stage in the months and years ahead, given that climate change is a topic of growing attention globally.
Inflation concerns about food, fuel, and utilities have risen but are still below pre-pandemic levels. Higher expenses on necessities may impact spending on discretionary categories, particularly for households with lower incomes and those who suffered financial losses from the pandemic. Inflation remains an important issue to watch.
The recent resurgence of consumer spending has elevated concerns about personal debt, although the 6% naming it their top concern in Q2 remains below pre-pandemic levels.

The share of consumers spending on discretionary categories was up across the board in Q2 2021—as investing continued to go mainstream.

1 in 5 Americans put money into investments in Q2—a peak level fostered by low interest rates, record stock-market performance, and stimulus payments. While the growth of retail investing was fueled earlier in the pandemic by a dearth of alternatives to spend on, the trend continued in Q2 even as spending elsewhere rebounded.
Services categories saw the greatest boost in Q2, as pandemic mobility restrictions and capacity limits eased. 32% of consumers reported spending on holidays/vacation travel, up +7 ppts from Q1. Likewise, 19% spent on out-of-home entertainment (+6 ppts).
Spending across a range of goods also grew strongly as many people want to refresh their wardrobe and have the financial means, even for bigger-ticket items. In Q2, 27% of consumers reported spending on new clothes (+4 ppts), 26% spent on home improvements/decorating (+5 ppts), and 18% spent on new technology products (+5 ppts).
US consumers are feeling more financially secure. The latest stimulus package and an improving economy and job market have provided a boost: the percentage of people without spare cash dropped sharply (−9 ppts) from the prior quarter. This bodes well for near-term spending.

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SOURCE The Conference Board