NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the December 2023 Survey of Consumer Expectations (SCE) Household Spending Survey, which provides information on individuals’ experiences and expectations regarding household spending. The survey shows a continuation of the recent declining trend in monthly household spending growth, even though spending growth remains well above pre-pandemic levels.
The share of households that report making a large purchase during the past four months fell compared to August 2023 levels, although it increased for home repairs and electronics. Year-ahead overall household spending growth expectations similarly continued to moderate and reached 3.0% in December 2023, its lowest reading since December 2020 but above pre-pandemic levels. Median year-ahead expected growth in essential household spending—such as daily living expenses—declined. Meanwhile the median year-ahead expected growth in non-essential household spending—such as hobbies, leisure, and vacation—remained unchanged. Expected spending responses to an unexpected 10% increase in income show the average reported share that would be used to pay down debt increased to the highest level since August 2016, while the share that would be spent declined to its lowest level since the series began in August 2015.
The main findings from the December 2023 Survey, in comparison to the previous survey (August 2023) and the previous year (December 2022) are:
Experiences
- The median increase in monthly household spending compared to a year ago declined to 5.0% in December 2023, from 5.5% in August and 7.1% in December 2022, but remained well above its pre-pandemic level of 2.5% in December 2019. The decrease was most pronounced for respondents above age 60, with annual household incomes less than $50k and those with at most a high school degree.
- 59.7% of households in December 2023 reported making at least one large purchase in the last four months, below the 63.5% reading in August, but above the December 2022 level of 56.4%.
- The share reporting making a large purchase on home appliances and electronics increased in December 2023 relative to August, while the share reporting large item spending on furniture, vehicles, home repairs, homes, and vacations fell. The share reporting a large purchase on furniture declined to its lowest value since April 2020 and is below pre-pandemic levels.
- The reported degree of month-to-month variability in household income was slightly lower in December 2023 compared to its August and December 2022 readings.
Expectations
- Median expected growth in monthly overall household spending over the next year decreased to 3.0% in December 2023, from 3.4% in August, its lowest reading since December 2020. The decrease was broad-based across age, income, and education groups.
- Median year-ahead expected spending growth on housing increased slightly to 3.0% while it declined for food to 5.4%, clothing to 2.3%, transportation to 4.6%, medical care to 4.1%, utilities to 4.4%, and recreation to 2.6%.
- Differentiating spending on essential and non-essential items, the median year-ahead expected change in everyday essential spending dropped to 4.5% in December from 4.8% in August, its lowest reading since December 2020 but well above pre-COVID levels. The median expected change in spending on non-essential items over the next year instead remained unchanged at 1.9%.
- The average reported likelihood of making a large purchase over the next four months declined in December for home appliances, electronics, furniture, home repairs, vehicles, and vacations. Meanwhile, it increased for buying a home. This finding is consistent with households expecting a smaller increase in overall spending dollars over the next 12 months
- Reported expected spending responses to an unexpected 10% increase in income show an average 38.4% would be used by households to pay down debt (up from 33.8% in December 2022 and the highest reading since August 2016), 45.6% would be saved or invested (down from 47.7% in prior year), and 16.0% would be spent or donated (down from 18.5% in prior year and the lowest reading since the series began in August 2015).
Detailed results are available here.
About the SCE Household Spending Survey
The SCE Household Spending Survey, fielded as part of the Survey of Consumer Expectations (SCE), provides information on consumers' experiences and expectations regarding their spending patterns. Every four months, SCE panelists are asked details about their expectations for year-ahead changes in household spending (both in the aggregate and by category), spending on essential and non-essential items, and the likelihood of making different large purchases. The SCE Household Spending Survey also solicits information on the expected spending and saving response to an unexpected increase or decline in household income. In addition to questions about large purchases and changes in total spending over the past year, respondents are asked about the month-to-month variability in their household income.
For further information on the SCE, please refer to an overview of the survey methodology, the interactive chart guide, the survey questionnaire, and the FAQs.
