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March 28, 2023

Expense priorities during economic slowdowns and recessions

In times of economic slowdowns or recessions, consumers tend to cut expenses and reduce their spending on non-essential goods and services. They prioritize their necessary expenses and allocate their resources accordingly. The way people approach buying luxury goods like furniture during these times is heavily influenced by their financial situation and their perception of the economy's future.

Necessary expenses during recessions

  • Housing is one of the most necessary expenses for individuals and families. People tend to prioritize their rent or mortgage payments to avoid being evicted or foreclosed on.
  • Food and Utilities: People will also prioritize their basic needs such as food and utilities. These expenses are typically non-negotiable and need to be paid to maintain a comfortable living standard.
  • Healthcare is another necessary expense that people cannot cut back on, especially if they have ongoing health issues or chronic conditions.
  • Transportation is another necessary expense that people tend to prioritize. If people need a car for work or to get around, they may need to allocate resources to maintain their vehicle or to purchase a reliable one.
  • Education is often seen as an investment in one's future, and people may be willing to allocate resources towards it even during a recession. This may include continuing education courses or vocational training.
food is top priority

As expected food becomes top priority expense during times of economic slowdown

What customers cut back on during recessions

  • Non-Essential Goods and Services are often the first things to go when people are trying to cut back on expenses. This may include dining out, entertainment, travel, and luxury goods.
  • Clothing is often seen as a discretionary expense and may be one of the first things people cut back on during a recession.
  • Electronics such as smartphones, laptops, and gaming consoles are often seen as luxury items and may be cut back on during a recession.
  • Home Decor and Renovations: People may postpone home renovations or hold off on purchasing new home decor during a recession to save money.
careful planning

During hard times people cut on unnecessary home renovations until better times

How people approach buying luxury goods like furniture during recessions

When it comes to purchasing furniture and other types of luxury goods during a recession, consumers tend to be more cautious and strategic with their spending. They may opt for more affordable options or delay purchases altogether.

  • Bargain Hunting: Consumers may be more inclined to search for deals and discounts during a recession. They may wait for sales or promotions before making a purchase.
  • Prioritizing Quality and Longevity: While consumers may be more price-sensitive during a recession, they still value quality and longevity. They may be more likely to invest in a piece of furniture that is built to last, even if it means paying a higher upfront cost.
  • Opting for Timeless Styles: Consumers may also be more inclined to purchase timeless furniture styles that won't go out of fashion quickly. This can ensure that the furniture can be used for many years, reducing the need for frequent replacements.
  • Delaying Purchases: Consumers may opt to delay their furniture purchases until the economy stabilizes or they have more disposable income. This can allow them to focus on their necessary expenses while putting off non-essential purchases.

In conclusion, during recessions, consumers tend to cut back on non-essential expenses while prioritizing necessary expenses. When it comes to luxury goods like furniture, consumers tend to be more cautious with their spending and may opt for affordable options or delay purchases altogether. By prioritizing quality, longevity, and timeless styles, consumers can still invest in luxury goods while being mindful of their financial situation.

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