Economic confidence among consumers levelled up, according to recent statistics, hitting a year's peak.
In a recent survey conducted by McKinsey, US consumers have shown a significant increase in optimism towards spending, particularly in the third quarter of 2024. The survey, titled the McKinsey ConsumerWise survey, was conducted from late July through the first week of August.
The survey results indicate that 36% of consumers plan to spend on apparel in the coming months, making it the third most popular splurge category. Interestingly, Generation Z is the demographic most likely to splurge on apparel, with 40% ranking it as their top splurge category.
While younger consumers report significantly higher optimism than older ones, the survey also suggests that economic uncertainty and other external factors may affect the actual spending behavior of consumers, despite their intent to splurge. For instance, low-income Generation X people and middle-income Baby Boomers may decrease their intent to splurge compared to the previous quarter.
Despite this cautiousness towards spending, the report also indicates a willingness to splurge, depending on the category. Food, including restaurants, dining out, bars, and groceries, remains the top overall splurge category across all generations.
Interestingly, women respondents are prioritizing beauty and personal-care splurges in the coming months, with 59% of high-income Gen Z women choosing beauty and personal-care splurges. This finding contrasts with men, as 47% of men reported feeling optimistic about the economy, compared to 37% of women.
However, the report does not provide specifics about the luxury fashion consumers' comfort in spending, as mentioned in a separate report titled 'Luxury fashion consumers comfortable spending: report'. Similarly, the survey does not provide specifics about the back-to-school 2024 strategies for brands to win younger consumers as uncertainty endures.
The survey also suggests that consumers might be looking for ways to treat themselves after a period of sustained financial stress. However, the recent survey results indicate consumer intent to splurge, but this might not translate into actual spending behavior due to external factors.
Moreover, emerging economic indicators could dampen the newfound optimism among US consumers. Despite this, the survey serves as a positive sign for retailers and businesses, indicating a potential shift in consumer behavior towards spending, particularly in the apparel and food sectors.
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