Data Brief: 62% of Consumers Still Expect Recession, Despite Easing Inflation

With the U.S. dollar worth only about 88 cents in real terms under inflation pressures of 2022, consumers are clearly fatigued by the affordability battle and not optimistic about regaining buying power in the immediate future, which may have an icy effect on winter holiday receipts.

PYMNTS analyzed the state of the consumer mindset in the report Consumer Inflation Sentiment: Inflation Slowly Ebbs, But Consumer Outlook Remains Gloomy, surveying nearly 2,170 consumers and plumbing perceptions about expectations for economic recovery.

It isn’t pretty, at least in the third quarter. The study states that the “rising cost of essentials such as groceries, housing and fuel [is forcing] severe cutbacks on discretionary spending, and 70% of the surveyed consumers who made retail purchases have cut down on nonessential retail spending.”

Additionally, 61% of those surveyed said further price increases would be unsustainable. The average price increase of consumer goods was 8.3% in August, the lowest in six months but still higher than upbeat forecasts of 8.1%, according to the Bureau of Labor Statistics.

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PYMNTS data finds a weary consumer who’s taken a price beating in 2022 coming off a pandemic emergency without a moment to catch their breath in between.

As the inflation sentiment report states, “The average consumer expects inflation to continue at its current rate for more than 22 months into the future. Consumers living paycheck to paycheck with issues paying bills are the most pessimistic, with 28% saying they believe inflation will continue at its current rate for longer than two years.”

Despite slightly sunnier outlooks from the BLS, our data finds consumers not feeling the heat as they see high prices and belt-tightening as something we’ll be dealing with for a while yet.

Unmoved by job growth and falling gas prices and other factors as proof that we are not in a recession, many consumers are unconvinced.

Per the report, “62% of U.S. consumers expect a recession in the next two years, and 48% think it will happen in the next year. Financially struggling consumers are the most likely to believe that the U.S. is already in a recession, including 34% of consumers living paycheck to paycheck with issues paying bills and 29% of consumers annually earning less than $50,000.”

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