I hate to say I told you so.

Who am I kidding? It’s one of my all-time favorite things to do. 

I wrote back in early Q1 that 2023 would be the “Year of Emotional Well-Being.” Anecdotally, it’s proven itself out. 

The explosive sales in prestige beauty, the record number of Americans taking vacations this summer, and the continued urge to splurge – in the face of persistent inflation and economic headwinds – all reflect Americans’ conscious or unconscious desire to feel better, at any cost. PPSD (figure it out) is real and shows no signs of ending.

Well-being, almost singularly, explains the unprecedented patterns of trading off and trading down we’ve seen from consumers. It’s not just about moving from “goods” to “experiences.” It’s about the conflation of the two. Even people with high inflation concerns continue to spend more on premium food ingredients, while spending less on things like iodized salt or storage bags. Cooking quality meals makes people feel good. Ziplocs don’t.

Did you know the largest average check sizes in the QSR category today are coming from lower-income consumers? That’s because, as people trade down from more expensive restaurants, they’re still prioritizing the “occasion” of dining out, the feeling.   

It goes beyond anecdotal.

I’ve told you about the mind-blowing forecasting work we’re doing, using AI to find predictive indicators of market and company performance. We crawl tens of thousands of poll questions in our massive database to stitch together indices to both forecast all manner of things and identify key outcome drivers. 

This is what our national retail sales forecasting model looks like: 

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It’s 95.7% accurate on a monthly basis, 94.8% on 3-months, and 94.4% accurate on 6-months. Not bad for our first try. 

Here’s the coolest part. These are the questions and answers in our database the AI discovered that – in combination – most accurately predict retail sales:

The first four are intuitive. It’s the economy, stupid.

Equally impactful to the model, however, are four emotional attributes: varying degrees of sadness, stress, and fear. They ranked above hundreds of questions we track about shopping behavior, inflation, or anything else. 

In other words, well-being drives – and predicts – consumer behavior as much as anything else today. Believe the algorithms if you won’t take my word for it. 

Oh, and you should see what happens when we factor these emotional drivers into our advertising platform. That’s a conversation for another Saturday morning.

Here’s what we’re seeing:

Consumer confidence is getting uglier by the week. Not to rain on your holiday weekend, but even my chronic fiscal optimism is starting to get pretty shaky. Our Economic Sentiment Index had its fourth consecutive downward reading, reaching its lowest point of 2023. Confidence in personal finances fell the hardest, followed by the 6-month outlook for the U.S. economy. I’m afraid all that splurge-spending, combined with continued high costs of goods might be reaching a breaking point. It’s not to say the well-being trend will become less pronounced – on the contrary.

In related news, early-bird holiday shopping is beginning to lag 2022. Even with the flurry of “Christmas in July” promotions this year, the percentage of Americans who got an early jump on their holiday gift-buying has fallen behind the numbers we saw this time last year. The deficit is coming from Gen Z and Millennials, where rising credit card debt and looming worries about student loan payments are landing most squarely. Not coincidentally, a larger percentage of shoppers plan to increase their online buying this year, while the importance of deals/promotions and buy now, pay later options are heightened. 

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The unwelcome return of COVID could spur more online retail as well. In our 3 Things to Know this week, we examined Americans’ plans to get another COVID booster, as a new wave of the virus rears its head. Forty percent of adults say they’re at least somewhat likely to get a booster in the next month, the majority of whom are older. Continued skepticism about the vaccine is a culprit, particularly among – shocker – Republicans. We also looked at the disproportionate number of young people who saw Donald Trump’s interview with Tucker Carlson (because it aired on Twitter/X) and the rising public acceptance of tattoos. 

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Extreme weather is chewing up a lot of people’s attention, disrupting travel plans. Even before Hurricane Idalia hit Florida on Wednesday, we were seeing the impact of natural disasters weighing on consumers’ moods and behaviors. I feel like I’ve written about it every week. And now, the toll is starting to show up in consumer spending. Over 1 in 4 U.S. adults say they had to postpone or cancel one or more trips over the past year due to severe weather. That number jumps to 1 in 3 among city dwellers. Similarly, 23% of Americans say they’re reluctant to book air travel right now because of delay/cancellation concerns – up significantly from 16% in June. 

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All of that brings us back to well-being, which has been collectively sliding over the past two months. Apologies again for the downer email to kick off your Labor Day weekend, but it is what it is. After an amazing 9-month run, our Well-Being Index fell for the second consecutive month in August. Yes, well-being and consumer confidence are often correlated, but this is a mixture of things – most of which were alluded to above. And, on cue, anticipated cutbacks in spending were reported across nearly every category we track last month. It doesn’t mean people will stop prioritizing feel-good purchases…it just means they’ll have to make harder decisions everywhere else.  

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More awesomeness from the InsightStore™ this week:

The most popular questions this week:

How old do you feel right now?

Do you tend to correct people’s pronunciation of words or do you let it slide?

How scared would you be if you came face to face with a grizzly bear?

How important is it for you to look put together at all times?

Do you think middle school is, overall, more or less stressful than working full-time?

Answer Key: 36; Only if I know them well; Shit-less; Fairly important; Way less stressful.

Hoping you’re well.


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