My colleague Jitender Migliani and I have just published a report (Consumer Spending And The Economy Grow Despite Persistent Pessimism) based on the H2 2024 US macroeconomic trends and consumer behavior data that we’ve collected and analyzed. This report aims to shed light on the economy’s trajectory over the past year, its continued direction in 2024, and the implications for consumer behavior and brand strategy.
The US Economy Marches Right On …
The US economy, defying all expectations of a slowdown, continued to grow in the first half of 2024: Inflation continues to ease, and the unemployment rate remains below historical levels; wages and disposable income per capita continue to increase, and interest rates have been kept unchanged for over a year now. Forrester expects moderate economic growth in the second half of 2024.
… But Consumer Pessimism Defies Economic Optimism
This year’s reassuring macroeconomic data hasn’t made a dent in the American gloomy psyche; the University of Michigan’s Index of Consumer Sentiment hit a new low for the year in June. Chinks are appearing in an otherwise solid US economy — consumer loan default rates are at a historic high, while savings rates have fallen to a historic low. A large part of this apparent paradox is explained by the diverging sentiments of the “haves” and the “have-nots” (see figure below). This is at the heart of the paradox of a strong economy and soft confidence.
Brands Must Tweak Their Growth Strategies To Reflect Their Consumers’ Needs
There is no one American consumer, and brands must address the disparate needs of the customers they serve. Some brands, like McDonald’s and Target, have accommodated frugality with new pricing and products. Retailers like Bass Pro Shops facilitate affordability (often without compromising on price) using financing. Some, like P&G, haven’t ceded on price; instead, they offer premium value for a premium price, such as when charging $5 more for a razor to shave “tricky areas!”
Forrester clients can read our full forecast report. To stay connected to brand, marketing, and growth strategy topics, go to my Forrester bio and choose “Follow.” If you are a Forrester client interested in discussing these topics, please schedule time with me.
