2023 was a confusing year: the consumers blew cold, and the economy blew hot. The recession-to-be did not materialize, and the economic outlook wasn’t half as bad as consumers would have you believe. Yet notes from the post-pandemic blues keep wafting in the air no matter the macroeconomic drumbeat.
This year, in 2024, the economy is headed for a “soft landing” (that’s fancy speak for increasing interest rates to control inflation without crashing the economy). “Slow and low” are your words for the year – slower growth, lower inflation, lower interest, lower job growth. (Although we keep our fingers crossed behind our backs for a growth pick up in the second half from lower interest rates.)
In our new report, US Consumer Spending Outlook, 2024, I make sense of this economic outlook for marketers, brand strategists, and growth leaders. We advise all walks of B2C marketing executives to:
- Pay attention to kitchen table economics. There’s macroeconomics, and then there’s kitchen table economics! The media is rife with pricing horror stories, and consumers are fleeing to private labels. The 2024 outlook is no rosy rebound, so temper any excitement about averting a recession and generating historic corporate profits – consumer confidence is about as low as it’s been this century, and it’s going to show!
- Focus on non-price growth levers. Some categories will remain relatively immune from downward price pressure, but there is a clear trend of weakening prices. Without pricing power, brands must double down on volume growth (and four non-price levers will get you there).
- Emphasize differentiation. Companies accustomed to better post-pandemic times will find it difficult to wean off strong growth. Companies feel pressured to grow their slice when the pie doesn’t grow as fast, and the best way to attract and retain customers is to differentiate.
- Expect relief in the second half. Categories that depend on access to credit fare much better when borrowing costs are low. The expected rate cuts in the second half will lubricate the market and spur growth for durables, appliances, and home brands.
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