A Perfect Storm: Economic and Energy Crises Impacting American Consumers

Published Nov 11, 2022

Michelle Mischenko, Senior Research Director at Toluna

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Originally published by Quirk’s Media.

Consumers change spending habits but maintain ethical standards

The health and well-being of American consumers is set to take one of the biggest hits as we move further into the cost-of-living crisis and the warning signs of this are already showing. People are experiencing more stress, eating less healthily, smoking more and drinking more alcohol due to the economic situation. It’s affecting everything, including our personal health, how we plan our grocery shopping and where we’re cutting back to save money. In these times of uncertainty, brands need to sit up and take notice.

A chief concern, among other worries, is the global energy crisis. The primary cause of this is the tragic war in Ukraine, and the negative effects are being felt everywhere. Concern is building here in the U.S., with almost three-quarters of Americans (74%) saying they are worried about the energy situation and the cost of using electricity and gas.

Consumers change spending behaviors

Consumers are also making changes to their spending behavior due to the economic downturn. Nearly two-thirds of those surveyed agreed that the energy crisis and the rising cost of living is impacting their spending plans and almost the same percentage said that they were actively putting off large expenditures until the economic situation is more stable. Ironically, this deferred spending could delay the recovery that the country so badly needs.

In addition to these longer-term effects, many day-to-day habits are set to change in the short-term. Perhaps unsurprisingly, the survey found that people would be most willing to forego eating out (37%), forego ordering takeout (23%) and buying cheaper alternatives to usual purchases (21%) to save money. Therefore, the hospitality sector – which was hit hard by the pandemic – is going to struggle as the cost-of-living crisis continues.

Consumers are set to change their grocery shopping habits as well, with many spending more time visiting more stores in search of value for their money. The lower-priced supermarkets will inevitably benefit from this consumer need to get more bang for their buck and price comparison between online and offline channels will become more common. Two in five survey respondents (41%) said that unnecessary purchases will need to be reduced as costs rise.

Consumers have high ethical standards

Despite the bleak picture painted by the cost-of-living crisis and resulting changes in consumer behavior, ethical brand values remain important. According to 63% of respondents, brands need to be sincere and authentic in what they say and do. Consumers want them to enact policies that benefit the environment and society. They even want their investments to go towards businesses that operate in sectors with a sustainable business model. There is no room for ESG complacency in these tough economic times and brands will still need to pay attention to this area if they want to maintain consumer loyalty.

In this environment, the brands with the best chance of success are the ones that acknowledge the challenges that consumers are facing and deliver relevant, timely messaging. Affordability, empathy and support are key values that brands need to deliver now more than ever and they must deliver these through their actions, rather than just their words.

The Toluna Global Consumer Barometer surveyed over 1,000 U.S. adults.

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