Coronavirus BRIEFING

Survey Finds that High-End Consumers Have Made Biggest Reductions in Spending

NEW YORK—The ongoing coronavirus pandemic and economic recession has taken its toll on consumer spending across the board, but it appears that upper-income consumers have reduced their spending more than other income groups, according to a recent analysis by eMarketer.

Still, there’s a mix of commonality and difference in the ways various income groups have responded to this weird set of circumstances, the firm noted.

“While people with low incomes have taken the hardest financial hit, upper-income consumers have made the deepest spending cuts,” Mark Dolliver, eMarketer principal analyst at Insider Intelligence, noted in a recent post by the research firm. (Dolliver also is author of the firm’s recent report, “Gauging Consumers Across Income Brackets.”

“After all, upper-income consumers are typically the biggest spenders and have the most spending available for cuts,” he said.

Opportunity Insights (a Harvard-based research project) said two-thirds of the total decline in credit card spending for January through May “had come from households in the top 25 percent of the income distribution,” according to the eMarketer report.

Primed by stimulus payments, spending by low-income consumers had recovered (temporarily, anyway) from its March–April plunge and was 1.1 percent higher in late August than it had been in January. Spending by upper-income consumers also recovered some lost ground but was still 7.5 percent below its January level, while spending by middle-income households was down 1.9 percent.

Looking across income lines, Morning Consult polling in June found many U.S. adults deferring big purchases. Still, others went ahead and bought. That’s especially true for the top income bracket, where respondents who decided against a planned major purchase were outnumbered by those who proceeded with it (15 percent versus 21 percent).

One thing consumers are unlikely to do post-pandemic is spend heedlessly, as bargain hunting is an ingrained habit at all income levels. In September 2019 polling by IRI, 79 percent of under-$35,000s said they “try new, lower-priced brands to save money,” as did 63 percent in the $100,000-plus bracket. Half or more respondents in each bracket reported often buying private-label goods.

In another indication of broad-based frugality, dollar stores have a constituency across income brackets. Civic Science polling in October 2019 through January 2020 asked whether respondents felt favorable, neutral, or unfavorable about shopping at dollar stores. While under-$50,000s were the most likely to be favorable and least likely to be unfavorable (50 percent versus 11 percent), the $50,000–$100,000s were also more favorable than unfavorable (37 percent versus 20 percent). Those in the $100,000-plus bracket were split about evenly (31 percent versus 30 percent).

Given these long-standing predilections, at least some of the economizing that consumers have practiced during the pandemic is bound to persist. Bargain hunting will have special urgency for low-income households, as it did during their slow recovery from the Great Recession.