• by Sarah Mahoney  @mahoney_sarah, August 28, 2024

 America's favorite splurge? Dining out. Image: Carrabba's Italian Grill

When it comes to its financial future, America’s mood is improving. In McKinsey & Co.’s latest ConsumerWise analysis, 41% of respondents say they are optimistic about the U.S. economy, up from 33% in the previous quarter. They plan to spend -- and even trade up -- a little more freely in the coming months, especially on essential, semi-discretionary, and discretionary items.

That jibes with the just-released monthly Consumer Confidence Index, which shows an increasingly rosy outlook for the economy, the job market and income.

Marketers keep close tabs on such measures because it impacts their sales results. However, economists track them even more closely because peoples’ money moods are meaningful:  Consumer spending accounts for an estimated 70% of U.S. economic activity.

McKinsey reports that Gen Z, millennials, men and higher-income people are especially upbeat.

While inflation is still a concern among 53% of respondents, 37% are aware of stabilization and say that’s making them feel more positive. Last quarter, only 31% had that awareness.

That’s not to say there aren’t other worries, which the consulting company says still paints a picture of “cautiousness toward spending and a simultaneous willingness to splurge,” it writes in the report.

The research did reveal a sizable gender gap, with 47% of men saying they’re optimistic versus 37% of women. That’s a marked difference, with men buoyed by what they see as an improving job market and women weighed down over concerns about making ends meet.

While it makes sense that more-affluent consumers are more encouraged, age seems to be a more significant determinant of current mood. Gen Z and millennials are more upbeat. Given a higher long-term unemployment rate among older workers, McKinsey notes that Gen X and baby boomers may be less hopeful.

The report also calls out the groups already planning their splurges, including 71% of Gen Z respondents and 42% of the overall sample.

And when it comes to those indulgences, food is the big winner, with 40% reporting they’ll spend more on restaurants, dining out and bars, and 39% saying they’ll spend more freely on groceries. Apparel, beauty and personal care come next.

The Conference Board tracks consumer confidence and says the index is above 80 for the second consecutive month. (A score below 80 can signal a recession.)

It reports that on a six-month moving average basis, plans to buy a home fell to a 12-year low while buying plans for cars improved slightly. Intentions for big-ticket appliance purchases are up, driven by refrigerators, TVs, and washing machines. And in good news for tech companies, plans to buy a smartphone and laptops in the next six months also rose.