With 2023 right around the corner, everyone wants to know what the new year will bring. So we surveyed over 1,000 US consumers to learn how their financial habits have changed in 2022 and break down what it means for the year to come.
Here’s what we found:
1. 2023 Will Be the Year of Uncertainty
If there’s one thing we’re certain of, it’s how uncertain people feel about the future. 2023 is shaping up to be a period of major transition, perhaps the most so in decades. Transitioning to what exactly is anybody’s guess.
When people aren’t confident in what the future holds, they tend to prepare for the worst. When we asked respondents what has affected their non-essential spending, 28% said “general uncertainty” — the highest percentage after general inflation (50%) and increases in cost-of-living expenses (44%).
Boomers and Gen Xers are the most pessimistic; one-third have scaled back spending because they believe a recession is impending, compared to the 25% average across all respondents. But bad vibes reign across all ages, with 56% saying they expect the costs of essentials to increase over the next 12 months.
2. Consumers Will Keep Postponing Big Purchases
All this belt-tightening means people are holding off on spending big. 38% of our survey respondents postponed a major purchase until 2023. The top reasons given include prioritizing more important items, reassessing budgets, and failing to meet savings goals.
Notably, Millennials over-indexed in two areas here: 44% said they pushed back a big purchase to next year, and 25% said that it was due to focusing on expenses related to their children (compared to just 17% of total respondents).
If the past is any guide, consumers are likely to push back major purchases even further — or scrap the idea of buying them entirely. 44% of respondents postponed a purchase they had been saving up for in the past six months, and we expect that trend to continue throughout the new year.
Unsurprisingly, what’s most often getting postponed or canceled are the same big ticket items that have been most affected by rising gas prices and supply chain issues: cars, vacations, and furniture. Which brings us to our next prediction…
3. Long-lasting Furniture Will Outshine Fast Furniture
Fast furniture was one of the big winners of the early pandemic. Stuck at home, millions of Americans turned to online retailers like Ikea and Wayfair to upgrade their spaces.
But now, all those sofas are coming home to roost. People are starting to realize that the furniture they bought in droves simply wasn’t made to last.
It’s a big reason why, of the 22% of respondents who said they were saving up for furniture or home goods, over half specified they were doing so for a sofa and an additional 35% for a bed. The most popular pandemic-era furniture purchases are starting to break down as retailers jack up prices by as much as 80%. Expect furniture prices to keep rising, and consumers to start saving for pricier but longer-lasting pieces, in 2023.
4. Crowdfunding Purchases Will Gain Momentum
From ditching Buy Now, Pay Later schemes to prioritizing the best loyalty programs, it’s clear that consumers have spent the last year looking for better ways to shop. Our survey results were just the latest data to bear that out.
60% of respondents expressed interest in retailers offering “crowdfunding” options for purchases — as in a mechanism that lets family and friends chip in to help buy something they’re saving for. That number is especially high for younger consumers, with 72% of Gen Zers and 75% of Millennials (compared to 59%of Gen Xers and just 34% of Boomers) indicating interest.
Obviously, financial strain is a big reason why. But the appeal is also psychological: getting something as a gift causes a bigger endorphin rush than purchasing it yourself, after all. Crowdfunding allows consumers to share an experience in the same way.
Right now, very few retailers offer such an option. But if there’s ever a year for crowdfunding purchases to go mainstream, it’s 2023.
Trust us, these findings are just the tip of the iceberg. Subscribe here to receive next month's installment of The Savings Scene!