Turns Out You Only Think You’re Spending Less Money

  • Share
  • Read Later

American consumers claim that they’re not spending as much money this year on restaurants, bar tabs, home purchases, and other key categories. The actual consumer spending data tells a different story.

According to new surveys, American consumers are spending less money. Or at least, that is, they say they are. In a poll conducted by the consumer research firm Mintel, Americans said they have been spending more in only two of the 13 categories included in the study: in-home food (i.e., groceries) and household care. For all of the other categories, including home and garden, leisure and entertainment, dining out, vacations, and “out of home alcoholic drinks,” most consumers said that they have reduced spending compared to 2012. In that latter category—basically, having drinks at bars and restaurants—there’s a difference of 47 percentage points “in favor of consumers claiming to be spending less on this area over the past year,” the report states.

In another consumer survey, this one conducted by Chase, 44% of Americans said they are spending as much or more than they did before the recession. Flip that data point around, though, and it appears as if the majority of American consumers indicated that they they’re spending less than prerecession levels. Indeed, in another section of the Chase survey, 68% of Americans said they have changed their spending habits and now drop less money on everyday purchases. More than half (55%) said they’re paying down credit card balances faster too.

So for the most part, it looks as if Americans are spending less money. Except we’re not.

(MORE: Amazon’s Hiring Spree Shows Difficulties for American Middle Class)

Mintel researchers noted a significant discrepancy in what the surveyed consumers claimed and what recent consumer purchasing data shows. Compared to last year, spending is up 5% or more in several of the categories mentioned above, including dining out, home and garden, and yes, “out of home alcoholic drinks.”

So while consumers think they’re spending less, the actual numbers tell a different story. Now, this discrepancy could be the result of a small minority of shoppers picking up spending in luxury categories such as high-end jewelry, cars, and vacations. In theory, they could more than make up for the consumers who have been cutting back, so there would appear to be net increases in all of those spending categories.

But Mintel’s researchers see things a little differently. Somewhat incongruously, the study states, “Mintel’s research finds consumer spending has in fact increased across all evaluated markets, highlighting the fact American consumers remain focused on getting the best deals for their dollars.”

How could a heightened desire to get the best deals increase spending? “Consumers have been conditioned by a nearly never-ending cycle of sales, coupon offers, members-only discounts, lower-priced product alternatives, etc., to avoid ever paying full price,” Mintel analyst Fiona O’Donnell said in the press release accompanying the survey.

(MORE: Cheap Jaguars, Luxury Volkswagens: Automakers Go High and Low to Expand Brand Appeal)

It seems a safe bet that due to the ubiquity of discounts and promotions lately, consumers are less likely to pay full price compared to prerecession times. But it’s pretty easy to see how shoppers can spend more in total even if they’re never paying retail prices. Retail marketers like to use phrases such as, “The more you spend, the more you save,” but savvy consumers focused on the bottom line understand that no one saves by purchasing more stuff. The truth is that the more you spend … the more you spend.

But some shoppers who are vigilant about only buying goods that are “on sale” can feel as if they are spending less money—when the opposite could very well be true. They may feel like they’re being careful with their money, and they may be proud that they’re scoring “deals,” yet all along their actual spending could be increasing. It just doesn’t feel that way.