How Inflation Fears Are Changing Consumer Behavior in 2022

How Recessionary Fears and Inflation are Influencing Consumer Behavior

How customers are changing behavior

Amid high inflation, rising layoffs, and increased talk of an upcoming recession, US consumers have begun changing their spending. Social listening data highlights three areas where Americans have changed their consumption behavior:

Data from Infegy Atlas provides insights into Americans’ consumption behavior and spending and can guide companies to allocate their resources and plan effectively amid budget cuts.

Increased recession-related post volume

Recession-related mentions in social conversations are at their highest point since August 2019 – this includes the heightened period during the onset of COVID-19 lockdown procedures (March 2020). The trend line from March 2022 through the present has shown exponential post-volume growth through July 2022. This implies that consumer conversations around potential economic impacts will continue to rise.

Figure 1: Post Volume on Recession-Related Topics

Increased inflation-related post volume

Economists argue the increased risk of recession is generated by pervasive inflation. This inflation is related to both supply and demand. On the supply-side, the COVID-19 pandemic crippled supply chains, which meant fewer goods reached American shores. On the demand side, after two years of COVID-related limitations, consumers are ready to spend. This means more people and dollars are chasing fewer goods and services. This increases the prices of those goods.

Figure 2: Post Volume on Inflation-Related Topics

Layoff-related post volume

As of August 2022, the US unemployment rate hovers around 3.9% – well-below historical trends. A recession now would, oddly enough, come at a time of record low unemployment.

While US consumers have mentioned layoffs on social media, those layoffs have generally been constrained to technology, advertising, and the mortgage industry. COVID-19-related layoffs were much more pervasive, evidenced by the elevated post volume around March 2020.

Figure 3: Post Volume on Layoff-Related Topics

News articles around changing consumer spending habits

Figure 4: Mainstream News Articles regarding changing consumer behavior

In local and national newspapers, articles show how customers have changed their spending habits to keep pace with increased prices. Social listening data provided plenty of corroborating evidence to support headlines like the ones above.

Consumers pivoting to dollar stores to chase value

Post volume around inexpensive retail stores has increased 58% in the last six months. This correlates with rising dollar store share prices and revenues. This represents consumers chasing value deals amid a more expensive shopping landscape.

Figure 5: Post Volume relating to Dollar Stores Trended Up

Share prices of inexpensive retail stores increase

Figure 6: Google Finance graphs showing share prices of Dollar General and Dollar Tree

Investors have flocked to low-dollar retail stores as a defensive play during an increasingly turbulent and volatile market. These spikes in shareholder value match the increased post-volume collected by Infegy Atlas.

Seltzer mentions drop more than light beer

Preference shifting is another common narrative of changing consumer behavior to recessionary pressures. The media has reported shrinking sparkling water sales as consumers shift to more affordable options. 

Social listening data corroborates this trend. Post volume around “seltzer” dropped 28% from January 2020 through July 2022, with the largest drop occurring in the last year.

Mentions of more affordable light beer dropped only by 18% during the same time frame.

Figure 7: Post Volume showing how light beer post volume has dropped less steeply than seltzer post volume

More consumer interest in cigarettes

Historically, vice goods like tobacco and alcohol are more resistant to economic shocks. This is holding true: Infegy Atlas shows a 23% increase in cigarette-related post volume over the last 18 months.

Figure 8: Post volume graph showing a 23% increase in attention being paid to cigarettes

Conclusion

These are just three examples of how social listening tells us where consumers are going to get the best value for their dollar amidst high inflation. As the economic conditions in the United States continue to change, the Infegy Insights team expects to see more examples of these shifting consumer preferences to emerge over the next few months.

Key Takeaways from Social Listening on Consumer Behavior in 2022

Recession and Inflation Impacting Consumer Choices: High inflation and recession fears drive US consumers to alter spending habits. Social media data highlights notable shifts.

Rising Recession Conversations: Social posts about recession are at their highest since August 2019, indicating growing concern over economic impacts.

Inflation Talks on the Rise: Pervasive inflation links to both supply chain disruptions and increased consumer demand post-COVID-19, inflating goods prices.

Layoff Mentions Limited but Present: Despite record low unemployment, tech and mortgage industries see social media discussions on layoffs.

Consumers Shift to Value Stores: Post volume on dollar stores up 58%, reflecting a consumer pivot to cost-effective retail amid rising prices.

Inexpensive Retail Stocks Rise: Investor movement toward dollar stores pushes share prices higher, correlating with increased social media mentions.

Seltzer Sees Decline, Light Beer Holds: Shift to affordable options sees seltzer mentions drop 28%, whereas light beer sees an 18% decline.

Cigarette Interest Increases: Tobacco post volume rises 23%, showing resilience of vice goods in economic downturns.

Conclusion: Social listening reveals consumer pursuit of value deals amid economic pressures, with more trends to watch in coming months.