MS Consumer Survey: 2/3 Plan Spending Cut In Next 6 Months, 30% Report No Savings

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By Senad Karaahmetovic

As much as 2/3 of consumers are planning to cut their spending over the next 6 months due to high inflation, Morgan Stanley warns.

After inflation, the U.S. political environment is a cause of concern for 41% of survey respondents, with the COVID-19 spread falling to 25% from the prior 32%.

“Apart from inflation, low-income consumers are generally more worried about the inability to pay rent and other debts, while upper income consumers over index on concerns over investments, the political environment in the U.S.and geopolitical conflicts,” strategist Michelle Weaver noted in a client note.

In general, the survey results showed weakening consumer confidence trends with only 23% expecting the economy to get better, which is the lowest since Morgan Stanley started conducting this survey and down from 26% two weeks ago.

On the other hand, 59% of consumers expect the economy to get worse, which compares to the same number seen two weeks ago and 50% in April.

“We asked consumers to estimate for how long they can use their savings to maintain their current lifestyle. Overall, 30% of consumers do not have savings, another one third have 3 months or less in savings, 23% have 4-12 months and 13% more than a year; this yields an average savings reserve of 4.4 month,” Weaver added.

Travel plans also look weak compared to last year, with 55% of consumers planning to travel in the next six months vs 64% in the summer of last year.

“Cruises and international travel were the most likely to be delayed or postponed,” the strategist concluded.