Minneapolis (CNN) I have good news for inflation front: Annual price growth has plunged to its slowest pace in nearly two years, the Commerce Department reported Friday.
However, for consumers Consistently high price and rising interest rates I am paying the price.
Inflation-adjusted consumer spending flattened out in March, marking the fourth time in five months that spending has flattened or declined. This pattern makes the January spending spike look more and more like a one-off spike.
EY chief economist Gregory Dako said: “The consumer engine is pounding.
softening expected Given the current economic climate, coupled with a natural rebalancing from post-lockdown sprawl. But economists say it’s unclear. This consumer “shrinkage” A return to more typical spending patterns, or perhaps a harbinger of a recession.
“The impact of the recent turmoil in the banking sector and the accompanying tightening of financial conditions has not yet been fully felt,” Dako said. “Further deterioration in the job market – the last leg of support for consumers – should accelerate the decline in consumer spending in the coming months, which should lead to the emergence of a recession by midyear.”
Amanda Bellamino, assistant professor of hospitality studies at the University of Nevada, Las Vegas, said consumers continue to demand experiences such as expensive concert tickets, travel, and restaurant visits. At the same time, they’re cutting costs elsewhere, forgoing expensive items, trading down to private his brands, and ditching some of their home subscription services.
“Consumers seem to keep making trade-offs for what they think is more valuable,” she said.
Balanced Duality of Hot Dogs and Architecture
The long-running hot dog hawker on West 72nd Street and Broadway in Manhattan is having the best spring in its 50-year history.
Famous hot dog stand Gray’s Papaya has been featured on TV and in the movies.
Known for its economic frankness, Gray’s Papaya is known for its “recession specials” that have lasted through the best of times, but not only did consumers spend more on the experience, but they also wanted comfort and comfort amid soaring prices. I found myself in a great place during the time when I was looking for a deal. inflation.
The hot dog restaurant, like others, has been hit by price hikes, but a concerted effort is being made to delay passing those costs on to customers as long as possible, according to the joint venture. author Rachel Gray said.
“We haven’t done a price increase in the last seven or eight years. We promise not to raise prices now,” she told CNN. I think we need a place where we can get something that is intimate.”
Launched by Gray’s husband Nicholas in the early ’80s as an ironic counter-attack to the economic recession of the time, the “Recession Special” is still going strong despite its original $1.95 contract. not affected by inflationThe combo meal, which consists of two flanks and a medium tropical drink for $6.95, remains a top seller, accounting for at least half of all sales, according to Rachel Gray.
“He said he thought it would bring some attention to the store. It was done quickly.” Through some of the booms, recessions have been special.”
In addition to the original specials, the one-dog and three-dog deals account for almost a third of sales.
Cooking Gray’s Papaya hot dogs.
But during recessions, the OG Special earns its hold. Gray papaya usually holds its own during recessions.
As such, Rachel Gray keeps a close eye on Gray’s yang to papaya yin: her architectural practice.
“When the economy hits a recession, my building business slows down and his hot dog business speeds up,” she said. “And vice versa. When we’re booming, my architectural practice is doing very well and his architecture is stable.”
Lately, Gray’s building business has slowed, she said, and activity appears to be easing toward a more typical trend than the breakneck pace of the post-pandemic.
“We are getting back to a more normal and sustainable pace, but there are concerns,” she said.
“Recession Thinking”
Overall inflation may be easing, but high levels of persistence “Core” Inflation Excluding food and energy, it’s holding consumers back, said Sophia Beig, an economist at polling and analytics firm Morning Consult.
“If you look at core inflation, especially core services inflation, it’s still pretty high,” she said. “It has eased slightly, but it is definitely not as high as the top-line numbers, so there is no doubt that prices for services, including airfare, education, restaurants, etc., are still quite high, weighing heavily on consumers. is not.”
The Morning Consult’s latest consumer inflation report, released earlier this week, found real consumer spending fell in March, Baig said. Americans are still price-sensitive and more likely to trade-in or even shy away from purchases, but they also seem to prioritize saving and paying off debt.
High inflation of consumer goods (CPG) Carman Allison, vice president of North American thought leadership at NIQ, a consumer analytics firm formerly known as NielsenIQ, says it has been haunting consumers for three years.
As of the week ending April 1, CPG prices were up 8.8% year-over-year, according to NIQ data. That’s down significantly from last fall’s pace of 12.2%, but well above the normal range of 2% to 3%.
Shopping at a Whole Foods Market supermarket in New York on Thursday, April 27, 2023.
Allison estimates that consumers are now spending $136 on baskets of goods that should have been $100 in 2019, changing consumer shopping behavior as a result.
The share of private label products in overall consumer goods sales reached a record 19.4% in the first quarter of this year, up 11 percentage points from the previous year, he said.
Private brand growth It is one of six metrics Allison tracks to determine consumer recession. Looking at activity within half a dozen categories of private label purchases, we see: consumer psychology,taller than inflationary pressure, Shift to value retailers,purchase promotion and shrinking consumptionAllison’s Consumer Recession Gauge measured 73 out of 100 in the first quarter.
He said it was up 17 points from the previous quarter.
“If you ask economists, ‘Are we in a recession?’ they will say, ‘No, we are not in a recession,'” he said. “But we do know that the way consumers shop and adapt to rising costs of living is recession mentality.”
