---
title: "Confirmed, the United States is experiencing a \"downgrade in consumption\"!"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/216625609.md"
description: "Goldman Sachs stated that both high-income and low-income consumers are shifting their consumption towards lower-tier products or services, a phenomenon known as \"consumption downgrading\""
datetime: "2024-10-12T05:32:05.000Z"
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  - [zh-HK](https://longbridge.com/zh-HK/news/216625609.md)
---

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# Confirmed, the United States is experiencing a "downgrade in consumption"!

The U.S. consumer market is undergoing a transformation. Both high-income and low-income consumers are showing significant downgrading in their consumption behavior.

Recently, a report from Goldman Sachs showed that the purchasing power of high-income consumers in the United States remains strong, while low-income consumers are showing weakness.

**However, both groups are shifting their consumption towards lower-tier products or services, known as "consumption downgrading."**

Furthermore, as prices of necessities such as food, insurance, and housing remain higher than pre-pandemic levels, consumers are starting to reduce their spending, prompting retailers to attract customers back through discounts.

## Consumption Downgrading Spreads to High-Income Groups

From Goldman Sachs' consumer basket perspective, the performance of middle-income consumers is better than that of high-income consumers, while low-income consumers continue to face increasing pressure.

Goldman Sachs analyst Caitlin Burrows pointed out that grocery store traffic for high-end consumers continues to grow: traffic increased by 8.7% year-on-year in August, with a positive year-on-year trend for the full year of 2024, showing double-digit growth compared to 2022.

Meanwhile, although low-income consumers have stable consumption demand for necessities, their spending on discretionary items such as luxury goods and cosmetics is relatively weak. Feeling the pressure, low-income consumers are turning to discount retailers like Walmart, Target, and Sam's Club.

Goldman Sachs noted that **this phenomenon of consumption downgrading exists in both high-income and low-income consumers.** For example, sales at Nordstrom (a luxury department store chain) remained flat or declined, while sales at Nordstrom Rack (a discount department store chain) increased.

The latest September inflation data has exceeded expectations across the board, and persistent inflation is affecting middle and low-income families. The Goldman Sachs report further proves that **the consumption slump has spread to wealthier households.**

## U.S. Consumers Downgrade Consumption, Retailers Resort to Price Cuts

In recent years, U.S. consumers have been suffering from inflation, with their cost of living continuously rising.

To cope with this situation, more and more Americans are reducing spending on non-essential items (such as home goods or expensive sneakers) and focusing on essential goods.

This shift in consumption has had a significant impact on the retail industry. To attract customers, retailers are resorting to the "killer move" of price cuts. According to reports， From home furnishing giant IKEA to sportswear giant Nike, **companies are all starting to attract customers back through discounts.**

"This year, global consumers have been affected by inflation, with everyone paying more for housing, food, and energy," said Jon Abrahamsson Ring, CEO of IKEA. To boost demand, IKEA has reduced product prices by around 10% globally in the current fiscal year, the largest annual price cut in the company's history.

Analysts believe that although inflation in the United States has eased this year, many consumers still feel significant pressure as prices for necessities such as food, insurance, and housing remain higher than pre-pandemic levels. **This has made consumers more cautious in their spending, leaning towards choosing products with relatively lower prices.**

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