March Consumer Spending Plummeted 2023


Despite lowering inflation, consumer spending fell in March. In March, Morning Consult’s own measure of inflation-adjusted total consumer expenditure fell 9.5%, reflecting retail spending reductions.

Morning Consult’s spending data regularly predicts the Bureau of Economic Analysis’ monthly personal consumption expenditures report. Top-line PCE may suffer from service and retail sales declines.

Price sensitivity lowered spending for all income categories.

All income categories spent less in March, while the wealthiest incomes spent 13% less. These groups’ monthly income sources and how current market movements affect them may explain these shifts. Consumer financial well-being scores show a similar trend: High-earners had the biggest financial decline last year.

Over the past year, Morning Consult’s measure of price sensitivity, or “sticker shock,” has grown for all income levels, indicating that customers are more likely to abandon a purchase due to high prices. As expected, low-income earners have higher price sensitivity, but inflation has minimized the inequalities across income groups. Price sensitivity increased most for higher earnings in March.

Last month’s inflation fell, but core inflation seems too high.

Monthly inflation rose less in March than in February, slowing annual inflation for a ninth month. While many categories declined, core inflation, particularly core services, drove most of the consumer price index growth.

The Federal Reserve constantly monitors core services inflation, which indicates strong inflation will continue. Due to supply measures and decreasing demand, Morning Consult’s Supply Chain Indexes of Consumer Inflation Pressures predict lower inflation in the coming months.

Consumers are abandoning and downgrading.

Morning Consult shows demand slowing. Since March 2022, Morning Consult’s Price Sensitivity and Substitutability indexes for new and used vehicles have increased significantly. Used car shoppers are more inclined to walk away or trade down to cheaper options, increasing price sensitivity and substitutability.

Substitution is stronger for new cars. High substitution effects for new automobiles show that consumers are responding to rising costs by trading down for cheaper new or used cars, which may lower new car prices.

Despite reduced demand in some categories, core inflation, driven by core services inflation, is too high to lower top-line inflation to the Fed’s 2% target. Persistently high core inflation suggests the Fed will hike rates somewhat in May. The Fed may delay interest rate hikes this summer if spending continues to fall.



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