With a majority of economists surveyed by The Wall Street Journal now saying the U.S. has slid into recession, the next question is, how long and how steep will the decline be?
Here in Wisconsin, the attitudes among consumers regarding something as simple as a trip to the grocery store may be as good a measure as any that we should not expect a turnaround too quickly.
By way of background, in a 2003 statewide survey of Wisconsin adults, slightly more than half (52 percent) of the respondents said they believed that they had less money left over at the end of each month than they had the month before. By July 2007, more than three-fourths (79 percent) of Wisconsin adults reported having less disposable income at the end of each month than they had in the previous year.
Now, it appears this growing sense of concern over family finances is translating into real changes in behavior in the supermarket aisles. The most recent Checkpoint economic and public affairs survey shows that 44 percent of Wisconsin residents admit to becoming more careful about what they buy or changing stores to take advantage of lower prices in the past 12 months.
Despite noticeable upgrades and improvements at many grocery stores around the state, just 4.5 percent of respondents said they have increased spending because of new or expanded stores or increased the amount of goods purchased at the stores in which they regularly shop.
The survey of 400 state residents was conducted Feb. 26 to March 2 and carries a margin of error of plus or minus 5 percentage points.
The change in shopping habits is more pronounced among those who believe things are “on the wrong track” in Wisconsin than among those who hold an optimistic view of the future.
Forty-eight percent of those who say they believe things are on the wrong track in Wisconsin have changed stores or become more careful about what they buy while 37 percent of those who believe things are on the right track have changed shopping habits.
The change is also more noticeable among women who, regardless of whether they are employed or not employed outside the home, visit grocery stores in greater numbers and shop for longer durations than men. Forty-nine percent of women respondents say they have changed stores or the items they buy to take advantage of lower prices compared with 39 percent of men.
In contrast to many other industries, the grocery business is not highly sensitive to changes in economic conditions, according to the Bureau of Labor Statistics. “Even during periods of recession, demand for food is likely to remain relatively stable,” the agency has noted.
All of which makes the emerging trends among state consumers more worrisome.
Nationwide, consumers are now spending about 10 percent of their disposable income on a combination of food to be eaten at home (5.8 percent of disposable income) and on food away from home (4.2 percent of disposable income), according to the U.S. Department of Agriculture’s Economic Research Service.
Given that these expenditures totaled $1.08 billion nationwide in 2006, it’s clear that changing consumer behavior in the supermarket aisle can have a significant impact on the economy.
As higher fuel prices work their way through the food chain — the USDA notes price increases for eggs, dairy and poultry products are leading the way — consumers who haven’t already changed shopping habits may be inclined to.
Already, nearly three out of four Wisconsin residents say in the most recent Checkpoint poll that their grocery bills have risen due to higher prices, rather than any increase in purchases.
Sereno, former business editor of the Wisconsin State Journal, is a senior manager at Wood Communications Group in Madison. E-mail jenny.sereno@wcgpr.com or call (608) 770-8084.
