Reports Predict How Consumer Confidence Will Affect Spending in 2024

Consumers are opening their wallets more selectively these days. Feeling the pressures of inflation and housing costs, they’re eating out less often, at less expensive times or places, and weighing their spending choices more carefully in 2024, making franchises work harder to earn their business.

Marigold’s 2024 Global Consumer Trends Index reports that half of the consumers it asked feel pessimistic about the economy.

In March, The Conference Board’s Consumer Confidence Index, at 104.7, showed little change in from February’s 104.8 number. But its Expectations Index—which measures consumers’ short-term expectations for income, business, and the job market—dropped to 73.8 from 76.3 in February. Readings under 80 can signal a potential recession, according to the Board.

Outlooks vary by demographic

Economic outlooks will differ depending on who you ask, and when. Younger Americans with high rent costs and student loans may be more pessimistic than members of Gen X, many of whom are in their peak earning years. Overall, the message is mixed, according to Dana M. Peterson, chief economist at The Conference Board.

“Consumers’ assessment of the present situation improved in March, but they also became more pessimistic about the future,” she said. “Confidence rose among consumers aged 55 and over, but deteriorated for those under 55. Separately, consumers in the $50,000–$99,999 income group reported lower confidence in March, while confidence improved slightly in all other income groups. However, over the last six months, confidence has been moving sideways with no real trend to the upside or downside either by income or age group.”

Spending robust but careful

Diane Swonk, chief economist for KPMG, said consumers are still splurging. “The mood appears to have shifted to sustain robust spending, despite the crimp of higher rates and the persistence of high price levels,” she said in a Newsweek report.

The economy is influencing consumer behavior, but lower prices aren’t enough to boost sales, according to the Marigold report. It found significant numbers of consumers saying that the quality of products or services (69%), convenience (59%), and excellent customer service (45%) are more important than price.

Less stuff, more services

Four years after the onset of the pandemic, consumers are backing off big-ticket purchases, Entrepreneur reports. However, they’re still open to purchasing services that make their lives easier, add convenience, or make their lives more enjoyable. Consumers are still spending and accruing debt, but they are spending differently, choosing to pay for experiences such as eating out, pets, self-care, and vacations.

The Conference Board echoed this in a March report on consumer trends: “There has been an enormous shift in consumer preferences, starting even before the pandemic. During the pandemic, spending on goods rose, while that on services fell. Now, there is a large shift to discretionary services, and people are seeking out experiences.” In short, there’s more of a focus on fun and self-care post-2020. “It is a good time to be in a business that offers people experience and helps them to have a good experience,” notes the report.

Brunch anyone?

Breakfast is big in 2024. As consumers look for bargains, they’re increasingly going out for breakfast or brunch instead of more-expensive dinners, according to NPR’s Marketplace. Daytime dining can be a way for consumers to save while still treating themselves.

“That breakfast spend is actually going to be lower,” said Robert Byrne, director of consumer and industry insights at Technomic. “So, for a consumer who loves restaurants—and we all do to some degree—they’re just flipping the script and going to breakfast or brunch because it’s less expensive.”

Outlook for 2024 and beyond

The question many franchisees may have is how long the spending will continue, and where. For the remainder of this year, The Conference Board predicts that consumers will exercise a little more self-control in spending than in past years.

“So long as consumers believe their jobs are safe, so long as they can make regular monthly payments easily, they will continue to spend and borrow,” The Conference Board predicts. “But if there is any significant reduction in employment levels, the consumer spending currently buoying the economy would dissipate quickly with a major change in the labor market. 2024 is likely to be a year of moderation. While spending patterns should be normal all year, it will be important to pay attention to jobs and employment numbers to determine if trends will shift.”