Consumers pessimistic about financial health in 2017, regardless of presidential election outcome

Almost two-thirds of U.S. consumers believe their financial health is poised to deteriorate in 2017, regardless of who wins the presidential election this year, according to Chicago-based market research firm IRI.

In the most recent quarterly IRI Consumer Connect survey, 64 percent of consumers said they believe their households’ financial health will decline if Donald Trump is elected, compared to 60 percent of consumers who said they believe their households' financial health will decline if Hillary Clinton is elected. In contrast, 36 percent believe their households’ financial health will improve if Trump is elected, while 40 percent said they believe their households' financial health will improve if Clinton is elected.

“While Americans’ attitudes towards personal finances have improved in recent years, this election process appears to signal a shift in consumer sentiment,” said Susan Viamari, vice president of thought leadership for IRI. “However, the changing of the guard at the White House always represents uncertainty, but this year close to 60 percent of consumers feel that their financial health will deteriorate no matter who is elected president. This will absolutely impact retailers and CPG manufacturers, as they brace for a tightening of the purse strings.”

For years, IRI has been studying the types of trade-offs that consumers make when they feel their budgets are being squeezed. Some behavior, such as list-making and shopping at multiple stores become part of the regular routine, IRI said, even when finances are looking stable or are improving. The IRI survey reveals that:

• Sixty-two percent of consumers who think their finances will decline said they will make written shopping lists, compared to 59 percent who think their finances will improve.
• Seventy-five percent of consumers who think their finances will decline said they will buy needed items when they are on sale to save money, compared to 54 percent who think their finances will improve.
• Sixty-two percent of consumers who think their finances will decline said they will purchase private label products to save money, compared to 41 percent who think their finances will improve.
• Forty-eight percent of consumers who think their finances will decline said they will try new lower-priced brands to save money, compared to 36 percent who think their finances will improve.
• Thirty-eight percent of consumers who think their finances will decline said they will visit multiple retailers to keep the grocery bills down, compared to 35 percent who think their finances will improve.

But consumers still want to treat themselves and will continue to splurge on indulgences, IRI noted. For example, 56 percent of consumers said they want gourmet food and beverages, and 55 percent of consumers said they desire local/artisan food and beverages. Moreover, 51 percent of consumers said they require prepared/easy-prep meal solutions; 51 percent said they fancy natural/organic food and beverages; 48 percent said they wish for technology that would make shopping the store more exciting; and 39 percent said they would like the ability to purchase online and pick up in store

During the Great Recession, younger consumers had the most pessimistic outlook. However, the tide is definitely turning, IRI said — the survey found that younger consumers are now more optimistic than older consumers about their personal finances in the next six months prior to the inauguration of a new president. A full 78 percent of consumers age 18-34 and 69 percent age 35-54 said they believe their households’ financial health will improve in the next six months, compared to 60 percent age 55 and up.

Thirty-eight percent of 18- to 34-year-olds and 31 percent of 35- to 54-year-olds are willing to pay more for food/beverages that are natural and organic, IRI noted, compared to 21 percent of those age 55 and up. Moreover, 58 percent of 18- to 34-year-olds and 52 percent of 35- to 54-year-olds are willing to pay more for over-the-counter medications that treat multiple symptoms, compared to 43 percent of those age 55 and up

Still, younger consumers are willing to make trade-offs to save money. After all, they have come up in a very conservative place in time, and frugality is becoming programmed into their CPG shopping journey, IRI said. For example, 53 percent of 18- to 34-year-olds and 51 percent of 35- to 54-year-olds buy beauty products that are not their regular brands because they’re on sale, compared to 40 percent of those age of 55 and up. In addition, 59 percent of 18- to 34-year-olds and 48 percent of 35- to 54-year-olds buy food/beverage brands that are not their preferred brands because they have a coupon, compared to 41 percent of those age 55 and up.

”When it comes to decoding the consumer mindset, there is perhaps nothing more complicated than predicting how a significant transition such as electing a new president will impact the way consumers feel and behave,” Viamari said. “CPG manufacturers and retailers must be more vigilant than ever as the torch is passed, and ready to respond in real time to shifting attitudes that ripple through the marketplace.”