Economy weighs heavy on communications & home entertainment expenses

New research finds nearly half of household decision-makers view their current communications home entertainment services as excessive; correlation with economic views significant


9.13.22 – August’s 8.3% inflation rate was higher than many economists had expected, but down from its high in June. Nonetheless, the Labor Department reported the price of gasoline increased 26% year-over-year, with electricity up 16% and groceries up 14%. To address persistently high inflation, the Fed will move continue its agenda of rate increases, hoping to further slow demand and give the supply chain some time to catch up. Consumers, however, have just arisen from two years of lockdown, meaning it might require more significant rate increases than expected.

Times are tough, and though August’s numbers are improvements from the highs of June, U.S. households are realizing that the economy is only at the beginning of what will be a long recovery. It is in this context that home decision-makers search for ways to reduce expenses, among them communication and home media services. When asked how they feel about the state of the current economy, five-in-six heads of household responded negatively (‘fair’ or ‘poor’). Only one in six viewed the U.S. economy positively (‘good’ or ‘excellent’). This according to Aluma’s July survey of nearly 2,000 U.S. heads of household. Generally, householders 45 years of age and older feel worse about the state of the U.S. economy than do those less than 45. Negativity was strongest among the 45-54 cohort, while positivity was strongest among the 35-44 cohort (22%).

When asked how they feel about the future of the U.S. economy, almost two-thirds of householders were either somewhat or very pessimistic. Decision makers between 45 and 54 years of age were most pessimistic about the future of the U.S. economy (69% negative), while those between the ages of 35 and 44 were the most optimistic about the economy’s future (40%).

“U.S. householders are roughly five times more likely to view the current economy negatively than positively, and two times more likely to believe the economy will further deteriorate versus improve,” noted Michael Greeson, founder and principal analyst at Aluma Insights. “The ‘good news’ is that positivity about the economy’s future is more than twice as high as positivity about the current economy, a small bit of light in otherwise dense economic fog.”

The impact of current and future views of the economy on the perceptions household decision-makers have about communications and home entertainment (CE) expenses is telling. Almost half of U.S. households are disposed to reduce these expenses, with only 3% open to spending more. (Note that communications expenses include internet, landline phone, and mobile phone. Home entertainment expenses include pay TV, SVOD, TVOD, game, and music services.)

“The correlations between the likelihood of expense reductions and one’s perception of the economy are strong,” said Greeson. Aluma research found nearly 90% of those likely to cut back on their CE expenses view the current economy negatively, compared with only 11% that view the economy positively. Same for 68% of those pessimistic about the economy’s future and 55% of those that view their financial situation as fair or poor. “How decision-makers view the current economy weighs more heavily than other economic factors on whether to reduce a CE expense or not.”

This data is drawn from a July 2022 survey of 1,970 U.S. heads of household and is the statistical basis for Aluma’s new 4-report series discussing how U.S.  impact of economic uncertainty on home communication and home media services. For more information about this project, please contact Aluma.

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