As companies have been reporting earnings recently, many have noted weakness in low-income spending, even as higher income groups have remained less impacted by recent macro pressures.  With gas prices rising and no stimulus checks on the horizon, it is unclear how long this low income weakness will last.  In today’s Insight Flash, we take advantage of our unique household demographic data to better understand where a low income pullback in spend will have the strongest impact.

Lapping 2020 store closures allowed for low income shoppers to grow spend by a double digit y/y percentage in March through December of last year.  This slowed dramatically in March and April of 2022, with low income spend growth on credit and debit cards less than half of spend growth for the overall panel.  The lowest income group making less than $40,000 per year saw a dramatic deceleration in y/y spend growth to 4.3% in March and 5.1% in April, while the highest income group making more than $150,000 per year spent 15.7% more y/y in March and 15.2% y/y more in April.

Low Income Total Spend

With gas and grocery prices rising, low income shoppers are cutting back on discretionary spend.  In the last three months, the largest declines in credit and debit card spend among those making less than $40,000 per year have come in Fitness Products/Training, Home Services, and Home Furnishings.  All three subindustries have seen y/y declines in spend over -25%.

Low Income Change in Spend by Subindustry

Note:  Y/y change in spend among those making <=$40,000 per year; 91 days ending 5/22/22

CE Transact also allows users to easily filter for which brands might be most exposed to low income weakness.  When looking at the percentage of a brand’s spend from low income shoppers, discounters, fast food chains, and pay-as-you-go cell phone services stand out as the most exposed.  

Low Income Exposure

Note:  91 days ending 5/15/2022; shoppers making <=$40,000 per year; limited to brands with at least 3500 shoppers in period