Nearly all Americans cut spending amid inflation: CNBC survey

Nearly all Americans are cutting back in some way, according to a new survey by CNBC and Morning Consult.

Survey Finds 92% of Americans Are Returning Products, Further Proving What Retailers Love walmart, Target, The Home Depot and Best Buy It was called a cautious shift in consumer spending in the first quarter.

Shoppers continue to report that inflation is squeezing their finances, with middle-income Americans particularly concerned. Among survey respondents, 92 percent of middle-income Americans (or those earning between $50,000 and $100,000 a year) said they were “somewhat” or “very” concerned about rising prices.

That’s higher than the low- and high-income groups, with 88 percent in each group saying they’re concerned about rising prices. One bright spot: The proportion of high-income households — represented by those earning $100,000 or more a year — improved from a year ago, when 92% expressed concern about inflation, according to the survey.

Over the past six months, rising prices have led nearly 80 percent of consumers to cut spending on discretionary items such as entertainment, home improvement, clothing and appliances, the survey found.

Additionally, two-thirds of respondents said they were spending less on essentials like groceries, utilities and gas. In the grocery category, more than half of consumers said they were buying cheaper alternatives, such as private label brands, or just generally buying less.

“Customers continue to seek value given the impact of inflation,” Walmart Chief Executive Doug McMillan said on the retailer’s first-quarter earnings call. “Compared to last year, the private label penetration rate of Wal-Mart in the United States increased by about 110 basis points” A basis point is one hundred percent.

Spending at value-oriented grocery stores outpaced spending in the entire grocery sector in May, according to credit and debit card spending data aggregated by Bank of America.

“We think this reflects lower trade due to higher revenues, which is in line with comments from Grocery Outlet and Walmart,” said BofA Securities analyst Robert Ohmes.

What’s more, consumers are not expected to change their spending habits for the rest of the year.

Two-thirds of respondents to the CNBC/Morning Consult survey said they still plan to cut spending on essentials over the next six months, with 77% planning to cut spending on non-discretionary goods Only slightly fewer respondents who said they would cut have already cut that area.

The CNBC and Morning Consult poll was conducted online earlier this month, polling more than 4,400 adults.

Of the categories hardest hit by inflation-driven spending cuts, apparel was the No. 1 discretionary category for consumers to cut back on, with 63% of respondents reporting fewer purchases since the start of 2023.

Walmart and Target, the largest U.S. multi-category retailers, both reported weak spending on apparel in the first quarter.

While experience-based spending – especially travel – has fared better than buying goods this year, the survey found that spending at bars and restaurants was the second most likely category of discretionary items to be cut, with 62% saying spending decreased.

Total monthly restaurant spending slowed in May from April, according to Bank of America credit and debit card data. Spending in the “fast casual” segment continued to slow, and revenue in “casual dining” was lower than last month, with pizza in particular continuing to see year-over-year declines.

Spending on entertainment outside of the home, including concerts, has improved slightly, with 58% of consumers saying they have reduced entertainment spending, according to a CNBC-Morning Consult survey.

Meanwhile, more than half of Americans say they have cut back on major household-related spending, such as renovations or appliances.

“We’re seeing more ‘break, fix, replace’ than upgrades (in appliances) and are a little sensitive to these single, higher priced discretionary items,” said Home Depot CEO Ted Decker ( Ted Decker) told CNBC ahead of Tuesday’s investor day.