Retailers and service providers slash prices to attract budget-conscious shoppers, resulting in increased consumer spending. (Shutterstock)
- U.S. economy grew 2.8% in Q2, driven by consumer spending on discounted goods and services.
- Amazon's Prime Day saw record $14.2 billion in sales, with other retailers offering competitive deals.
- Young consumers lead spending surge, but credit card delinquencies hint at underlying financial stress.
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Companies across various sectors are offering deep discounts this summer, and consumers are eagerly taking advantage, NBC News reports.
From retail giants like Amazon and Best Buy to airlines and fast-food chains, businesses are slashing prices to attract price-conscious customers.
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The Strategy Appears to Be Working
The U.S. economy grew by 2.8% in the second quarter, largely driven by consumer spending on goods and services, according to recent economic data.
During Amazon’s Prime Day event, shoppers spent a record $14.2 billion across U.S. online retailers, an 11% increase from the previous year.
“You have a heightened level of promotion, heightened levels of discounts, and that makes for a perfect storm where the consumer feels like, ‘This is a really great opportunity for me to buy,'” said Vivek Pandya, Adobe’s lead insights analyst.
Financial Stress Lurks Behind Spending Spree
Beneath the surface of strong consumer spending, there are signs of financial stress. Citigroup noted that only the highest-income quartile has more savings than they did in early 2019, and credit card delinquency rates have reached their highest level in nearly 12 years.
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In response to these pressures, companies are offering various promotions. Target and Walgreens have cut prices on thousands of items, while airlines like JetBlue and Southwest are offering discounted flights. Fast-food chains such as McDonald’s and Burger King are extending value meal deals.
Data from location analytics firm Placer.ai suggests these strategies are effective, with increased foot traffic reported at restaurants offering promotions.
Young Consumers Lead Spending Trend
Younger consumers, particularly millennials and Gen Z, are driving some of this spending. American Express reported that these cardholders increased their spending by 13% in the second quarter.
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As inflation continues to cool, consumers are becoming more attuned to price fluctuations. “They understand how quickly the winds can change,” Pandya said. “They’re going to really take advantage of these moments to spend when the value is good.”
Read more at Yahoo Finance.
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