At the heels of rising inflation, consumers drastically changed their spending habits in 2023 to cut back and save money each month.
Non-essential retail purchases were the first things to go, with 60% of consumers avoiding retail spending last year, a PYMNTS study revealed. When consumers did decide to buy retail, secondhand items grew in popularity. About 43% of consumers bought something secondhand in 2023, according to the study.
Of the 43% of consumers, high-income earners made up the majority of those who bought secondhand. And it’s clear why consumers switched from brand-new to secondhand items more often. Consumers in the PYMNTS study reported saving 30% to 35% by buying used items.
One of the stores that benefited most from this consumer switch is REI. The company saw a nearly 100% surge in purchases in 2023. Millennials who favored renting or buying used outdoor equipment rather than new drove this growth, PYMNTS reports.
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CONSUMERS USING MORE BUY NOW, PAY LATER APPS, CUTTING BACK NON-ESSENTIALS AS BASIC LIVING COSTS SOAR
While 2023 wasn’t the best year for major purchases like homes or vehicles, 2024 holds more hope, with auto sales and home purchases set to rise.
Car purchases are trending upward this year, with 42% of drivers reporting that they’re considering buying a new or used vehicle, according to a Jerry survey. That’s almost double the 23% of people that said the same in 2023.
Of the consumers who said they weren’t ready to buy a vehicle in 2024, many indicated they’d reconsider if the market shifted slightly. About 22% reported they’d reconsider if vehicle prices dropped and 12% would consider buying if interest rates went down.
"Elevated car-ownership costs prevailed in 2023," said Henry Hoenig, Jerry data journalist and study author, in Jerry’s survey. "Car insurance expenses alone rose at an annual rate of 19.2 percent in October, the fastest increase since at least 1985, the earliest year for which data is available. But signs of hope are starting to show. Falling used vehicle prices and the promise of lower interest rates mean that the coming year will be at least a little bit easier for budget-stretched car owners."
Along with vehicle sales, home sales are projected to rise this year. Data from Bright MLS predicts home sales to go up by 12.1% and reach 4.6 million. Areas where housing prices are likely to go down will see the highest uptick in home sales.
Parts of California and Florida are expected to see more homes on the market and are growing increasingly more affordable, making them hot spots for 2024.
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HOME BUYERS STRUGGLE IN 2023, BUT HOMEOWNERSHIP RATE COULD RISE IN 2024
While retail sales dropped in 2023, there are signs that the market will rebound as the economy begins to recover. Retail sales rose by 0.6% in December 2023, up from the 0.3% gain in November 2023, according to the Commerce Department Census Bureau.
"There is the possibility we'll see some level of pullback in consumer spending in 2024 as consumers reevaluate their budgets and pay down some elevated debt levels," said Mike Graziano, RSM senior consumer products analyst. "However, even if that is the case, consumers are on solid footing entering 2024."
This increased spending comes at the heels of news that inflation is potentially going down and future interest rate cuts.
With interest rates trending down, loans may become more affordable in 2024. If you’re in the market for a low-interest loan, personal loans are easy-to-use options. When it comes to personal loan shopping, Credible can do the heavy lifting for you. With the click of a button, you can view multiple lenders, rates and terms in one spot.
CONSUMERS FEEL MORE CONFIDENT ABOUT FINANCES AND READY TO SPEND MONEY: SURVEY
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