Consumer spending rose 0.9% for the month of May, while personal income ticked upward 0.5%, according to the U.S. Bureau of Economic Analysis. Here, Marla Commons Vice President of Research North America at Mintel takes a look at where consumers are spending in the US.
US consumers increased spending in May, outpacing income growth and hitting a six-year high. As we highlighted in Mintel’s American Lifestyles 2015 report, released at the start of this month, this is the continuation of a trend in growing consumer confidence that is fueling economic stimulation. Mintel research indicates that Americans are feeling more confident in their personal financial situations this year and many anticipate further improvement in the coming months. Household spending expectations have stabilized post-recession, with one in five American consumers planning on spending more month-over month, pointing to the increased spending we’re experiencing as we head into Summer.
Spending in recreational categories, including vacations and tourism, is forecast to beat all other categories with 27% increases over the next five years. Consumers are spending more on vacations as they start to feel more confident in the economy and their employment. This market is supported by relatively wealthy Baby Boomers who are taking longer vacations as they retire from the work force, as well as Millennials who are increasing spending in the category. In fact, nearly half of US Millennials aspire to travel in the next three years.
Despite rising commodity prices and an uneven economic recovery, Mintel forecasts an increase of nearly 27% for dining out from 2014-19. As food prices continue to rise, consumers will flock to restaurants they view as offering safe, higher quality foods – even if it means paying more. For consumers, having confidence that the restaurant serves “real” food, whether described as local, organic, hormone-free, etc. will be key factors impacting restaurant choices.
Finally, despite many staple electronics categories struggling to maintain sales, gains in overall spending in technology and communications are expected to continue through 2019 with a 26% increase forecast. Electronics categories with primarily upgrade-motivated spending (eg smartphones) have been able to take advantage of enthusiasm related to powerful hardware and media capabilities. As interest in newer devices and services (eg wearables) builds, increases in the market are expected to accelerate.
For more details on US consumer spending in 2015, see the recent American Lifestyles press release here.
