We have been hearing a lot about the “current state of the economy,” inflation, high interest rates, etc. It’s a topic we can’t and shouldn’t ignore, especially when it comes to understanding consumer behavior and their habits.
The current state of the economy is having a significant impact on consumer spending and saving behaviors. Understanding these effects is crucial for businesses as it helps to predict changes in consumer behavior and adjust spending and saving strategies accordingly.
It probably goes without saying, but when the economy is strong, consumer confidence tends to be high, and people are more likely to spend, driving economic growth and benefiting businesses immensely. However, economic factors like high inflation and interest rates tend to decrease consumer confidence significantly. This all leads to consumers being more likely to focus on saving money rather than spending. This reduction in spending can slow economic growth, as businesses experience a decrease in revenue and may have to cut back on hiring and investment.
How is this all affecting consumers?
We were curious about the current economic conditions, especially as it relates to consumer habits in the financial services and insurance industries. Not only how it is affecting them, but also understanding whether the potential consumer journey is changing because of economic conditions.
To find out more, in a recent CARAVAN survey, we asked 1,000 consumers their thoughts. Are they being impacted significantly by high interest rates and other economic conditions? Are their habits changing? And more.
We asked consumers about their biggest financial concerns and if the current market environment has impacted them, especially as it relates to daily expenses, savings, and investments and retirement. The concerns consumers have mostly aligned with how their behaviors have changed. Being able to pay monthly expenses is a concern and most indicated that they are being more pragmatic when it comes to daily expenses (cutting back) and saving more. There are some (24%) that are concerned about their retirement future – they are lowering expectations when it comes to retirement funds.
We also asked how (and whether) current interest rates have impacted consumers. Nearly 7 out of 10 say they have been impacted and have changed some sort of behavior due to current interest rates. How they were impacted ranges from lowering spending on their credit cards, delaying major purchases and even putting off vacations. Some are attempting to shop for better interest rates on credit cards and loans to help alleviate the burden.
What is most discouraging is that only 1 out of 10 people believe interest rates will be lower next year and 62% believe it will be higher! This shows that consumer confidence could be suffering right now.
The state of the market, inflation, interest rates, etc. play such a crucial role in shaping consumer behaviors. Keeping a pulse on and understanding these behaviors is essential for businesses, as it helps predict changes and adjust strategies accordingly. By staying informed successful businesses can make the most out of the current conditions and prepare for future challenges.
Want to make sure your business has a pulse on understanding these changing consumer behaviors? Our CARAVAN Omnibus surveys get you the answers you need – fast and reliable. Contact us now to get started today.
Written by Dave Stewart, SVP, Client Advisory at Big Village