The holidays are approaching. Credit card debt has piled up. The flood of widespread earnings reports has slowly slowed.
Data and commentary show that U.S. consumers are feeling stressed and constrained in the final weeks of the year and beyond.
Student loans are having an impact
In recent months, PYMNTS Intelligence has found that nearly half of consumers say restarting student loan payments would hurt their ability to save. Additionally, 35% said they were worried about being able to cover their daily living expenses.
There is evidence that the effects are real and present. Depending on generation and student loan burden, his disposable income “eaten” can range from mid-single digits to low double digits.
Comments from people such as walmart and the goal Qualitatively, they have argued that student loan payments are putting pressure on consumers, or at least making them more cautious in the aisles. This is an added pressure in a paycheck-to-paycheck lifestyle that affects around 60% of consumers.
In an earnings call with Walmart analysts, management pointed to a slowdown in consumer spending in October, which led to a cautious outlook for the rest of the year, the chief financial officer said. john david rainey “There are student loan repayments that affect about 27 million Americans. All of this could be contributing to the slowdown.
Separately, target CEO brian cornell “Overall, consumers are still spending, but with rising interest rates, restarting student loan repayments, rising credit card debt and savings interest,” he said on his company’s earnings call (profit sales fell year-over-year). “Consumers are losing their desire to spend due to pressures such as the decline in consumer spending.” Discretionary income will be reduced, and households will be forced to make compromises. ”
Spending reversed in October.
Walmart’s October experience is consistent with government figures that showed retail and food service sales this week fell for the first time in seven months. Spending at department stores, measured month-over-month, fell by 1.2%, and e-commerce sales were flat.
Revolving card balances are stubbornly fixed
Credit is an important tool that allows us to continue spending where we are Spending. But there are signs that this payment method is becoming a little, well, strained. PYMNTS Intelligence Report “Using credit cards during economic turmoil” found that 15% of consumers are spending less on credit cards. This means that all other consumers are either maintaining their spending pace or increasing their spending pace. However, about half of consumers who say they have been adversely affected by inflation have revolving credit balances.
BNPL is appearing on more consumers’ radar screens
Considering pressures such as inflation, student loan repayments, and credit card obligations, buy now, pay later (BNPL) is key to making spending (even everyday expenses) more affordable. It’s no surprise that it’s becoming a popular choice. PYMNTS Intelligence found that 16% of US consumers, or 40.5 million people, used their BNPL in the past few months. Data shows that his 16% of BNPL users purchase via this option at least weekly, and an additional 25% purchase monthly. This means that nearly 4 out of 10 US consumers have used their BNPL products at least once a month. Maintaining cash and lines of credit is the main reason most BNPL users choose this payment method, and it is widely accepted as a budgeting tool.
feelings fade away
Emotions determine spending intentions, and hence spending. The University of Michigan found earlier this month that consumers expect inflation to be 4.4% a year from now, up from 4.2% last month. Looking out five years, consumers expect her inflation to rise by 3.2%. This is his highest level in five years since 2011. Earlier this year, he said a PYMNTS survey of a wide range of consumers said inflation would remain firmly in place until October 2024, so it would take about a year to reach pre-pandemic levels. As many as 85% of consumers feel or do not feel that their income is not keeping up with inflation.
It could be a long, cold winter with colder effects for consumers, and for the merchants who depend on them.
