Changing Consumer Spending Patterns to Affect Marketers

Debt-​fueled spending, of the non-​mortgage kind, contributed to the boom economy in a very big way. In the last of the boom years, non-​mortgage debt reached $200 billion annually.  A recent Federal Reserve Bank of New York report shows that  debt other than mortgage or home equity has dropped significantly since 2008 – by 8.7%. This steep drop points to a new consumer attitude about buying on credit.

The debt picture in the U.S. resembles something like the following:

  • Mortgage 74%
  • Home Equity Revolving 6%
  • Auto loan 6%
  • Credit card 6%
  • Student loan 5%
  • Other 3%

In the past ten years, credit card debt has dropped from 8% to 6% of consumer debt. At the same time, the number of credit card accounts peaked in 2008 at nearly 500 million and has since fallen to about 378 million.  This represents a drop of 24%. Consumers are clearly focusing on paying down their credit card debt. The percentage  of delinquent credit card accounts has begun to fall from its peak of nearly 14% earlier this year.

With this consumer mindset in place, marketers must continue to position their goods and services with a value focus in order to increase sales for the short term. And as long as the employment picture remains clouded, the value message will probably remain in play.

[Sources: Quarterly Report on Household Debt and Credit. November 2010. Federal Reserve Bank of New York. Web. 19 Nov. 2010; Brown, Meta, et al. Have consumers become more frugal? Federal Reserve Bank of New York. November 2010. Web. 22 Nov. 2010
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.