‘Tumultuous time’ for consumers

David Mitchell: People hunker down when faced with a lot of uncertainty.

Carly Asher-August: Stagnation in terms of holiday shopping is possible this year.

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For consumers, it would be hard not to notice increases in prices across the spectrum of goods and services – some by a little, and others by a lot.

In its August Food Price Outlook, the U.S. Department of Agriculture’s Economic Research Service projected that prices for all food would increase 2.9% in 2025. It forecast that a hike of 2.2% in food-at-home prices will be outpaced by a food-away-from-home uptick of 3.9%.

Some grocery categories are more volatile in the USDA report, which projected beef and veal prices would increase 9.9% this year, and egg prices would increase 24.4%.

The predicted increases are stacked on to food price upticks in recent years – a 9.9% rise in 2022, followed by 5.8% in 2023 and 2.3% in 2024, the report stated.

Consumer price index data released by the Bureau of Labor Statistics in September showed the all-items index increasing 2.9% over a 12-month period, before seasonal adjustment.

A Bankrate analysis of BLS data showed that since the pandemic, consumer prices are 24.3% more expensive. This means Americans need about $1,243 to buy the same goods and services that cost $1,000 before the coronavirus impacted the economy, the publication stated.

Bankrate pegged shelter as accounting for roughly half, or 48%, of the increase in inflation over the past year, with food accounting for 14% and car insurance for 6%.

David Mitchell, professor of economics and director of the Bureau of Economic Research and Center for Economic Education at Missouri State University, said consumers are feeling the pressure from price increases, but more than that, they are experiencing a ratcheting up of uncertainty.

“Consumers and businesses don’t like that,” he said.

On-again, off-again tariffs play a huge role in that uncertainty, according to Mitchell, who said consumers like knowing if a car costs X amount of dollars, it will likely cost about the same six months from now, meaning they can use that time to save for a downpayment.

“With tariffs, they don’t know what it’s going to do,” he said.

As a result, they may feel pressured to purchase the vehicle sooner. With less of a downpayment, payments are higher, and any slack in their budget tightens, Mitchell said.

Like average consumers, economist Mitchell is also having a hard time predicting what will happen with tariffs. He’s been tracking changes as he prepares for a speech on the topic in October.

“There’s been so much change that I can’t even keep track of it myself,” he said.

The August Bankrate report signaled that tariffs are affecting the economy because core goods prices (excluding food and energy) accounted for 20% of overall inflation between June and July.

Consumers are also noticing a slowdown in employment, which started even before the current presidential administration, he said.

“People are hearing about revisions – the employment picture is worse than they thought it was,” he said.

On the business side, immigration crackdowns are concerning, Mitchell said.

“Am I going to have my workforce here to build these houses, or are they going to get picked up in the Home Depot parking lot?” he said.

Consumer behavior can be expected to change in light of the questions, Mitchell said.

“When people are faced with a lot of uncertainty, they hunker down,” he said. “We’re seeing some of that as well.”

Focus on value
Carly Asher-August is a clinical assistant professor in MSU’s Management Department but spent 10 years teaching marketing.

Asher-August said consumers are always taking in information and responding to economic changes, and businesses can feel the impact of their decisions.

“I think right now can be a somewhat tumultuous time as an ultimate consumer,” she said.

By ultimate consumer, Asher-August is referring to the person at the end of the product distribution chain for goods or services, meaning the product will not be further altered or sold after it reaches them.

She noted a lot of global and national events are on people’s minds, and that can make consumers uncertain about both the near and far future.

“That changes our shopping habits,” she said. “For a lot of consumers, when things feel unstable or shaky, they pull the purse strings a little tighter, especially when planning for major purchases.”

There have always been American consumers who can’t afford necessities, but now a lot more people are being choosier with how they spend their disposable income, she said.

With growing reluctance among consumers to spend, what is a business to do? Asher-August suggests focusing on value.

“Value for consumers is something brands should always be thinking about, but especially now,” she said. “They should be asking, what is important to my customer base, and how am I creating value that’s superior to my competitors’?”

Value might include supporting local businesses instead of national chains, Asher-August said. The price might be more expensive with a small business, but that doesn’t mean they are price-gouging; instead, it reflects the fact that they are buying goods at much smaller volume.

Asher-August suggests businesses promote their local roots – and with it their support of the local economy – and she adds that consumers should avoid thinking in a binary, all-or-nothing way about shopping locally.

“We can get caught up in 100% effort, but if every consumer in Springfield shifted 10% of their dollars to local businesses, it would be an incredible change and benefit for the local economy,” she said.

As the holiday shopping season approaches, Asher-August predicted shoppers will try to get the most bang for their budgetary buck.

“Sometimes planning and being choosier about shopping or not buying all at once is a way of doing that,” she said. “I would not be surprised if we see some stagnation in terms of holiday shopping.”

Asher-August said shareholders put pressure on large corporations to grow by a certain number of percentage points each year, and that pressure gets passed on to shoppers.

“It can be mildly maddening as an ultimate consumer,” she said. “There’s so much pressure from marketing to buy, to spend, to keep up with stuff. You can feel like you’re in a fight. You’ve got your budget, but your budget doesn’t do as much as it did two years ago, five years ago, 10 years ago.”

Consumer signals
In retail outlets in the Springfield area, business owners are still trying to suss out what behaviors they’re seeing from consumers and what might be around the bend.

Stephanie Lender, owner of floral shop The 417 Willow LLC in Marshfield, said business is really good despite increases in prices.

“It hasn’t hit us too bad as far as fresh flowers go, but they’ve definitely gone up a little bit,” she said.

Lender said floral consumers are not changing their buying habits, especially when it comes to weddings.

“When they want a certain flower, that’s what they go for,” she said.

Lender also owns Unique Antiques, an antique mall, also in Marshfield. Business is good there, too, she said, noting the resell industry is insulated from some of the issues faced by regular retailers.

“It’s kind of like bargain shopping,” she said. “I’ve had no complaints.”

At North Star Christmas Co. on Commercial Street, co-owner Derek Baker said the brick-and-mortar store has been open only about six months, so it’s too soon to tell if consumer habits are changing. The store had its genesis in online sales, and those continue, with Baker noting business seems to be about the same so far.

“We’re just riding the wave to see where it all goes,” he said.

Jess Hamlet, owner of the Village Meeple LLC board game cafe on Battlefield Road, said she has definitely noticed a change in her customers’ behaviors and also in the distributors of the games she sells.

“They’re having to deal with the tariff situation, and companies are responsible for paying that cost,” she said. “For some, it’s way more than they budgeted for.”

Prices of goods are rising, though Hamlet said she tries to keep costs down for customers as much as she can.

She said she has noticed an influx of people discovering the shop from her partnership with the Springfield-Greene County Library’s summer reading program, for which she offers library patrons store rewards for hitting reading targets.

“I think some families may be looking for low-cost or free activities to do together right now,” she said.

A family of four pays $20 for an all-day pass to play at Village Meeple, she added.

The business also sells games, and Hamlet said those aren’t moving quite as quickly as they once did. Customers are also favoring lower-priced or smaller games.

Hamlet said her first query of customers seeking a game is to ask what their budget is.

“I’ve definitely noticed that they are a little lower than they had been in the past,” she said. “It used to be $50, but now it’s typically $20-$30.”

Hamlet said with tariffs, it will be interesting to see what the next few months bring for the games she stocks.

“My personal opinion, we’re going to run into a shortage,” she said. “My advice to customers is get your shopping done a little early this year.”