3/08/2025: Coffee is more important than eggs

Sure, eggs are all the rage – a political volleyball du jour, used by the left to rub President Trump’s nose in the fact that prices didn’t come down “on Day One.” Those on the right tout it as a holdover from the “disastrous” Biden economy, only a matter of time until Trump fixes it. 

Of course, the current egg crisis isn’t really about the economy or politics at all. We’ll see a legitimate economic impact on agricultural products when tariff costs (if) and vanishing migrant workers (as we speak) hit America’s farmers. For now, eggs are a red herring.

That’s not to say high egg prices aren’t affecting a large subset of U.S. households. Over a third say they’re buying fewer eggs as a result. Another 12% are shopping around for lower prices.

Egg prices don’t have huge household financial implications, anyway. Gas prices, on the other hand, do. Most people have to drive, like it or not. I could easily go a week without eggs. Driving? No way. Rising fuel costs meaningfully eat away at discretionary spending in other areas. 

The other problem with gas is there’s scant optionality. You might be able to find a distant gas station to shave a few pennies per gallon, but the extra fuel you’ll burn driving there will likely offset the difference. Consumers have little control. Relative to household income, gas prices impact everyone equally. It’s fait accompli, meaning it’s far less interesting to study.

Which brings us to coffee. 

In all the predictive modeling we’ve done lately to help our clients forecast and explain shifts in their customers’ spending, one daily survey question repeatedly pops up. It tracks coffee-buying behaviors. We pay close attention to one answer in particular: “I seek the lowest priced coffee.” 

Roughly 75% of U.S. adults drink coffee occasionally. What matters more is 43% drink coffee “every day, without fail.” Count me among them. I’d give up a week of driving before I gave up a week of morning coffee, if only because I’d be a road rage incident waiting to happen.

Caffeine addicts also have tons of optionality. At the grocery store, we can choose between Starbucks, Folger’s, or a store brand. On the road, it could be a convenience store or a fancy barista joint. We’ll trade down, but we won’t cut back. Ever. It’s the ultimate bellwether, predicting spending shifts across nearly every category we’ve studied.

I’ll just tell you (for free) that low-priced coffee-seekers spiked dramatically starting in late January. This could be better or worse among your core customers. 

If you ever wonder why we track nearly 800,000 survey questions in our database, it’s because we can discover stuff like this. 

Enjoy your Saturday morning coffee.

Here’s what we’re seeing:

(First, a rare editor’s note. Today’s insights are pretty much entirely centered on the same theme. It low-key reminds me of the early COVID days, business-wise. ‘Unprecedented times’ are here again. Please let us know how we can help. This is when we’re at our best.)

Recession fears are climbing fast. The number of Americans who believe a recession is around the corner increased 32% in the last four months, the highest we’ve seen since early 2023. To be fair, a lot of people thought we were actually in a recession in 2022 (we weren’t), but the recent rise in expectations is significant. No surprise, the data is heavily skewed by party affiliation, as it always is. Higher-income households are the most concerned, perhaps because they have the most (portfolios) to lose. Recession fears skew higher among consumers at higher education levels too, perhaps because they know what they’re talking about.

Tariff anxiety is also rising by the day. Forty-two percent of U.S. adults are now “very concerned” about the potential impact of tariffs on their household expenses, up from 36% just two months ago. Yet again, it’s politically dependent, which I’ll eventually stop saying because, sigh. When asked which major spending categories they’re likely to cut if tariffs do indeed eat away at family budgets, travel showed the biggest jump from February to March – although dining out is still at the top of the list. They’re also prepared to delay buying a new car or big electronics. Here’s hoping the worry is all for naught.

Even before (or if) tariff costs become a reality, the uncertainty already has people pulling back their spending, beyond coffee. Seven in ten Americans claim they cut spending through one or more tactics over the past 30 days. The most common step cited is “reducing non-essential shopping,” which could cover most areas of discretionary retail. Next on the list are people who say they’re dining out less, a common refrain no matter what we’re asking. Tactics like buying generic or private label brands, using coupons or discount apps, and canceling or downgrading subscription services have all been employed by at least half or nearly half of U.S. shoppers. We also took a closer look at the 28% of adults who said they purchased second-hand items.

The pandemic called and it wants its hoarding back. In our 3 Things to Know this week, we learned that over one-third of Americans say they’ve stockpiled at least one category of goods in the past month, due to fears of shortages, rising costs, or some unforeseeable emergency. Canned or frozen foods and toilet paper (again) are the most hoarded items. We also found that people are cutting back on a lot of breakfast items, not just eggs, although bread and bagels are holding fairly steady. Finally, we revealed that people are less likely to boycott a brand or switch to one based on the social causes they support, at least compared to two years ago. 

Last but not least, current economic conditions – and/or uncertainty – have Americans rethinking their summer home improvement plans. The percentage of U.S. homeowners who are planning any remodeling or renovation projects this year (55%) is down considerably over this time last year (62%), primarily among do-it-yourselfers. The malaise appears to be a bigger drag on Home Depot customers (generally more urban to suburban) versus Lowe’s customers (more suburban to rural). That’s another political correlation without having to say it. Of those still planning projects this year, lower-cost improvements like landscaping, interior painting, and flooring top the list. 

More (not economy-related) awesomeness from the InsightStore™:

• Cannabis drinks are growing in popularity, especially among young parents;
• Attitudes toward seed oils are a new socio-political dividing line.

The most popular questions this week:

Do you enjoy winter travel?

Do you remember a time before the internet?

Do you ever totally stop watching a TV show you once loved?

Who do you think is the NBA’s best player?

Do you think the current trade dispute between the US and Canada will or will not be resolved soon?

Answer Key: Only if it’s to somewhere warm; Vividly, for better and worse; We’re currently watching The West Wing for the 4^th time, so no; Nikola Jokic; I have absolutely no idea.

Hoping you’re well.

JD

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