As summer begins in the middle of the Juneteenth long weekend, consumer spending forecasts appear to contain a contradiction.
PYMNTS intelligence research shows 83% of consumers say daily prices have increased. Nearly two-thirds say that external forces affect the U.S. economy a great deal or a great deal. 58% expect broader economic forces to impact their personal finances in the next six months. However, only 38% said they plan to cut spending over the next three months.
At first glance, these numbers seem difficult to reconcile. If consumers remain concerned about prices and the economy, why aren’t more people preparing to cut spending?
The answer may be that households do not make spending decisions according to the categories used by economists, merchants, or card issuers. They make it according to their own priorities.
As PYMNTS CEO Karen Webster He wrote earlier this year“Substance is not a characteristic of the alimony, but rather a characteristic of the person on whom the money is spent.”
The same purchase means different things to different households
The latest findings from Discount Economics show that cost pressures remain widespread.
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In our survey, 53% cited daily living expenses as their current challenge. 44% cited the broader economic environment, 43% cited housing costs and 42% identified future planning and saving as concerns.
But these numbers tell only part of the story. Private school tuition may be viewed as completely discretionary by one family and completely untouchable by another. Grocery delivery may seem like a convenient purchase in transactional data but it functions as a necessity for the working parent balancing work schedules, childcare, and household responsibilities.
Over the next few weeks, at least for some families, summer vacation may be the first to be cut short. For others, it may be protected because it represents that one annual family trip that was already planned and budgeted for months ago. For some consumers, dining out becomes discretionary. For others, convenience-driven purchases remain an integral part of their daily routine.
The same category can occupy completely different positions in different family budgets.
Understand priorities
This creates a challenge for financial institutions, rewards programs, and merchants trying to predict consumer behavior.
Traditional spending analysis often starts with categories. He travels. Eat. entertainment. grocery. Subscriptions.
Consumers don’t necessarily think that way.
PYMNTS intelligence findings indicate that households evaluate spending through the lens of personal obligations, commitments and priorities. Family-related expenses, housing costs, childcare obligations, and recurring household purchases are often protected even when budgets are tight.
For issuers, this could increase the value of rewards programs tied to categories that consumers are unlikely to abandon. For loyalty programs, it makes it even more important to identify where customers place spending within the hierarchy of priorities rather than relying solely on merchant categories.
Installment products have traditionally been associated with retail purchases, but the broader opportunity may lie in helping consumers manage larger recurring expenses that they consider important enough to maintain regardless of economic conditions. Families often work harder to protect spending related to children, education, household operations, and family support than in many traditional discretionary categories.
A different way to read Summer Consumer
PYMNTS data does not indicate consumer readiness to increase spending. Nor does it indicate a person’s willingness to cut back on expenses on a large scale. Instead, it indicates that consumers are entering the summer with a clear sense of which expenses are most important to them personally.
This reality complicates spending forecasts, but it also creates opportunities.
