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CoverStory

Meanwhile, research conducted by the Center for
Generational Kinetics points to weak consumer
balance sheets. The survey found 51 percent of workers
are short on money before they get to payday. The last
time the survey was run, in 2018, it was 24 percent. This
is not just happening with lower income consumers.
Over a third of workers reporting household incomes
in excess of $250,000 have found themselves in that
position this year, the research center said.

A recent blog post by Harvard economist Jason Furman
suggests consumer spending may belie sentiments
expressed to pollsters. "When consumers speak to
pollsters, they register a dour mood; but whether
shopping online or in person, they are still buying at
an increasing pace," he wrote. "The big question, then,
is whether the spending boom will last."
Seizing strategic advantages
Among business leaders surveyed by Umpqua Bank,
34 percent rated economic conditions as good or
excellent in the United States, down from 41 percent in
2021. Those rating the economy as poor increased from
18 percent to 34 percent.

"We definitely see more caution on the part of all
businesses, given a series of economic factors outside
their control," said Richard Cabrera, head of middle
market banking at Umpqua. "But tempered expectations
can be a strategic advantage, making companies more
prepared to weather storms and better positioned if
the economy surprises to the upside."

Some of the spending increases, especially in
categories like groceries, were likely prompted by
Covid. (Mastercard's SpendingPulse shows spending
on groceries in June was up 14 percent over June 2021
and 24.8 percent over June 2019.)

"It's interesting; we've found that consumer behavior
has been quite continuous, meaning consumers have
been spending – and spending more than in past
years – on a range of categories that were made bigger
by Covid," said Tamara Charm, a partner with the
consultancy McKinsey & Co.

Grocery delivery was one of the stickiest behaviors
to come out of the pandemic, Charm noted, with 65
percent of consumers surveyed by McKinsey saying
they use grocery delivery services and plan to continue
to do so.

Patti Murphy is senior editor at The Green Sheet and self-described
payments maven of the fourth estate. Follow her on Twitter @
GS_PayMaven.

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