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New KCI Consumer Stress Index reveals a paradox

The Index shows consumers are stressed about money but still spend.

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CHICAGO—The Kearney Consumer Institute (KCI), the internal think tank of global strategy and management consultancy Kearney, unveiled its latest Consumer Stress Index today. This is the Index's fifth quarterly release and first year-over-year comparison. It offers a detailed consumer sentiment analysis examining how macro stressors influence personal financial decisions and purchasing behaviors.

The 2024 data reveals a nuanced reality: Consumers are stressed about money but still spend. This paradox is evident in the disconnect between media narratives of "cash-strapped consumers" and the robust spending seen during the holiday season, including record-breaking travel numbers.

"The Consumer Stress Index highlights the gap between what consumers say and what they do," said KCI lead Katie Thomas, who spearheaded the study. "People are stressed about money, but they're also spending money. This duality explains why malls and airports are crowded even as headlines suggest affordability challenges."

KCI lead Katie Thomas.

The Index surveyed 24,000 consumers across 12 countries, assessing stress levels across five key pillars: consumer wallet and finances, health and education, geopolitics and government, food and the environment, and innovation and technology. Key findings from the report include:

  1. Personal situations drive behavior, not broader economic sentiment
    Consumers' individual circumstances—such as job security and wage growth relative to the cost of living—are more accurate predictors of behavior than their general feelings about the economy. For example, nearly 75% of respondents said housing prices had little impact on their financial decisions, and affording food was not a major concern.
  2. Outdated perceptions of "Fair" pricing
    Consumers' ideas of "fair" prices have not kept pace with reality. While prices have risen over 20% since 2019, wages have largely kept up, and spending as a percentage of income has remained stable in most categories. As inflation stabilizes, consumers are expected to gradually adjust to "new-normal" pricing.
  3. New sectors emerge as indicators of financial health
    Traditionally a key measure of consumer financial health, grocery spending is no longer the sole indicator. With more brands and retailers offering competitive options for high-frequency purchases, consumers are optimizing their spending on "needs" to free up budgets for "wants" like travel and recreation.

"The data shows that consumers are becoming more strategic in their spending," Thomas added. "They're finding ways to stretch their budgets on essentials to afford the experiences and products they truly value."

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