8 Reasons Why Consumer Spending Patterns Change

There are many drivers behind the changes in consumer spending habits. While some are predictable, like time of year, other real-world factors can cause these patterns to break. 

Here are 8 of the top reasons consumer spending patterns change:

1. Seasonality

Spending patterns change throughout the year, varying from industry to industry. For example, spending in retail peaks during the holiday season. Travel spending typically ramps up closer to the summer, as people spend more on vacations and experiences, and then again during the holiday season, according to SpendingPulse™. Within travel, different sectors exhibit different patterns. Spending on airfare increases before travelers go on vacation because customers pay when booking their flights. In the hotel sector, customers typically pay once their stay is over, so spending lags slightly.

2. New products

New product launches and fads can also contribute to fluctuations in consumer spending. Over the years, releases of new technologies like phones and headphones have generated significant buzz and heightened consumer spending. The release of blockbuster video games can also drive a surge in entertainment sales and influence the broader economy. As one example, Call of Duty: Modern Warfare II surpassed $1 billion in worldwide sell-through in the first ten days of its release.

3. Commuting

Changes in when and where people work can have a sizeable impact on consumer spending patterns. As return to office mandates continue to be implemented, brick-and-mortar sales in major commuting cities may bounce back in response. Spending will tend to be concentrated on certain weekdays. For example, Tuesdays through Thursdays have seen increased lunchtime activity in parts of New York City, according to the Mastercard Economics Institute. At the same time, other workers have remained hybrid or fully remote, which has driven an uptick in online shopping.

4. Macroeconomic conditions

The broader economic landscape will always play a hand in how consumer spending ebbs and flows. A strong labor market and high employment confidence can drive increased consumer spending. On the other hand, high price inflation does not empower consumers to spend.

5. Fiscal policy

Fiscal activity at the national, state or local levels can also influence consumer spending behavior. Consider the stimulus checks that were provided during the COVID-19 pandemic. These large spikes in available cash and spending power drove boosts in consumer spending over time.

6. Stock market performance

When the financial markets are in flux, consumer spending patterns react. During the Great Recession of 2007-2009, for example, consumers were worried about job stability and savings, and spending slowed in the U.S. Stock market performance is a strong indicator of consumer confidence, so shocks like these can affect spending behavior.

7. Fuel prices

While prices in general can dissuade or encourage consumer spending, fuel prices in particular can impact spending. This is because fuel prices influence consumer mobility, which refers to how people get from place to place. When people are more likely to jump in their cars to head to the mall, brick-and-mortar sales at retailers and restaurants go up.

8. Demographic changes

Finally, the changing composition of populations over time can stimulate different consumer spending trends. For instance, global birth rates have been falling and are expected to continue falling through 2100. This decrease in the child population can have ripple effects in the broader economy, especially in the addressable market for children’s products.

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