There's a lot up against your wallet right now.
With inflation still at a 40-year high and lower tax refunds are coming in for families, people are making trade-offs on where to spend their money.
“Inflation is sitting at 8.5 % and every single month, it's like it keeps going up and up,” said Lisa Miller, a consumer insight specialist and founder of Lisa W. Miller & Associates, a Dallas-based business consulting firm. “So, unfortunately, that's taking dollars out of pocket just when it comes to everyday purchases because everything's so expensive.”
The firm has been tracking consumer sentiments since March 2020 and has polled more than 40,000 consumers as part of her "Journey Back to Joy" surveys and reports published monthly.
Miller’s latest data shows what people choosing to spend more money on right now – clothing, shoes, and car repairs.
Apparel might seem like a surprise but what is not surprising is that this is mostly tied to people preparing for upcoming vacations and going back to work full time, Miller said. Summer travel demand is expected to surpass numbers not seen in years.
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People are also taking the time to spend their money on taking care of car repairs.
“Because we haven't been driving them as much, maybe we've kind of put off taking care of them,” Miller said. “But now that we're out and about, more car repairs is also something consumers are saying they need to get taken care of before the prices go up.”
Consumer data from Numerator, a data and tech company serving the market research space, shows that consumers are also putting more money toward gas and alcohol.
When it comes to what consumers are not spending money on, the Numerator data shows that beauty products are trending down as people focus more on purchasing the essentials.
Miller’s report details three major things that people surveyed say they will hold off on until prices go down – that includes buying a car, remodeling something in your home, and actually buying a home.
"As it keeps going up and up and up, spending is going to go down because we can't afford things anymore,” she said. “That's just not a very good recipe for the economy right now. And it's just this race to nowhere."
That information is not surprising as home values reach record highs and inventory has plummeted to record lows, Miller said. Supply chain bottlenecks have also sent the prices of materials for home remodeling projects to new heights.
New and used car prices are also at record highs due to demand and supply chain tie-ups on parts. So Miller has observed people are also putting the brakes on buying cars, instead opting to repair what they have for now.
“I think the challenge will be the supply chain issues are what's really driving some of the costs up right now. So consumer demand as I mentioned is there but my hope is that come the summertime and as the supply chain continues to unwind, that hopefully, you know as we get through summer and then the holidays things will settle down a little bit."
Miller said at the end of the day, it’s up to the consumer how they want to spend their money.
“When it comes to how consumers should spend their money, we all need a little bit of joy right now,” she said. “So my advice to the consumers is to make sure you plan for those expenses that you need. But make sure to find joy, whether that's as simple as going to a movie or going out to splurging on some clothes for yourself. I think we all need a little joy right now.”