What you need to know

Consumers continued to improve their financial situations throughout 2021 amid declining unemployment rates and government aid. They also remain in good spirits about their finances going into 2022, with the US economy primed for continued growth in 2022. Despite the optimism, the annual inflation rate surged to a 39-year high, as supply chains continued to be strained amid high consumer demand. Along with growing uncertainty as to how inflation will play out in 2022, the consistent rise in prices for goods and services could put a dent in consumers’ financial optimism, especially low-earning households – eroding their purchasing power and elevating their cost of living.

Key issues covered in this Report

  • The impact of COVID-19 on consumer finances within the past year

  • Sentiments toward consumers’ financial future

  • Change in consumer spending habits

  • How consumers plan to manage inflation

Definition

For the purposes of this Report, the following categories of consumer finances are explored:

  • Consumers’ outlook on their future financial situations

  • Their current and future spending behaviors

  • Consumers’ attitudes toward managing inflation

COVID-19: US context

The first COVID-19 case was confirmed in the US in January 2020. It was declared a global health pandemic and national emergency in early March 2020. Across the US, various stay-at-home orders were put in place in Spring 2020, and nonessential businesses and school districts closed or shifted to remote operations. The remainder of 2020 saw rolling orders, as states and local governments relaxed and reinforced guidelines according to the spread of the virus in each region.

Vaccine rollout began for adults 18+ in December 2020. As of December 1, 2021, 70% of the US adult population had received their first dose of the vaccine and 60% had received their second dose. In May 2021, COVID vaccines were authorized for children 12-17 and in November 2021, the CDC extended its recommendation for vaccinations to children as young as age 5. 

Business operations resumed in most parts of the country as vaccines were administered and social distancing restrictions and capacity limitations were relaxed. However, localized surges in case counts and the rapid spread of the Delta variant caused increased restrictions in some areas of the country throughout 2021. In December 2021, the appearance of the Omicron variant raised concerns, leading to new travel restrictions in and out of the US, exacerbating supply chain shortages in many industries.

Economic and other assumptions

Mintel’s economic assumptions are based on forecasts released by the CBO on November 10, 2021. The CBO expects US real GDP to have increased at an annualized rate of 5.5% for 2021 (vs the 3.5% negative annual growth for 2020), and for growth to continue in 2022 to come in at 3.5% for the year. The forecast is a downgrade from earlier projections due to an expected resurgence in new cases in COVID-19 during the holidays and colder months due to more time spent indoors. Furthermore, the CBO expects the US Federal Reserve will raise policy rates earlier and more frequently than previously anticipated, further tampering growth.

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