Consumer Spending Outlook for 2022 Tax Refunds
Tax refund season offers a big financial stimulus for a majority of U.S. taxpayers: in 2022, 59 percent of consumers are expecting a tax refund to buoy their bank accounts.
While many consumers have already filed their taxes, tax refund checks can take weeks to be processed and delivered to consumers. In the meantime, those taxpayers likely have plans for how they’ll use this money to afford major purchases or shore up their financial picture.
Those spending trends can fluctuate from one year to the next, especially under the influence of consumer confidence in the economy, inflation, job markets and other financial factors. With stock markets in flux, inflation on the rise and interest rates slated for a series of hikes, 2022 figures to bring drastic changes to how consumers plan to spend their tax refund money.
Here’s a look at those trends, and how they might affect local businesses across a wide range of industries.
Consumers Will Approach Spending With Caution
The economic conditions experienced thus far in 2022 are leading consumers to take a more conservative approach to tax refund spending than what businesses may have experienced in the recent past.
With inflation on the rise, some consumers are tightening their spending and avoiding bigger purchases and indulgent spending. While consumers may be willing to spend their tax refund, they’re more likely to seek out more essential expenses, or to exercise more discretion when choosing how they’ll reward themselves with their check from Uncle Sam.
Forty-six percent of consumers are currently planning to save their tax refunds in 2022. Whether or not that money actually gets saved remains to be seen, but for businesses, the message is clear: if you want to reap the rewards of tax refunds in 2022, you might need to convince certain consumers that your business is a smart place to put their refund dollars.
Home Services and Repairs Will Be in High Demand
While frivolous spending may be less common among consumers in 2022, essential spending—including home repairs and other home projects—are expected to be more resilient in the face of declining consumer confidence. Businesses in construction and home services are likely to see strong demand from consumers, especially in cases where those services are deemed urgent by homeowners and residents.
Consumer surveys have shown that 22 percent of taxpayers receiving a refund are planning to use that money to cover necessary household expenses. Businesses in these industries can take advantage by running promotions and other campaigns aimed at converting homeowners who see the value—and the need—of paying for these expenses sooner than later.
Tourism Could Enjoy a Nice Spending Bump
Although consumers have overall indicated that they plan to be more cautious about their spending, many still have intentions of traveling in the months ahead—and their tax refund is key to those ambitions. Eight percent of consumers surveyed said they plan to use their tax refund to book a vacation.
These vacation dreams—combined with increased consumer anxieties about the economy—could also combine to create an advertising opportunity around “staycations.” Taxpayers receiving a refund may be more inclined to consider local tourism options that lets them enjoy a break from daily life and have a little vacation fun while staying close to home and
Financial Planners May Want to Invest in Relevant Messaging
For many businesses, consumer reluctance to spend tax refund money is a potential threat to seasonal revenues. But with more than half of taxpayers hoping to save and/or invest their refund, financial planners could benefit from ad campaigns aimed at attracting new clients eager to use their refund as a launching pad to achieving other financial goals.
These businesses may want to consider ad campaigns targeted to consumers with limited savings and investments, including young professionals. Local financial planners can use those tax refunds to expand their client base and lay a foundation for managed portfolio growth in the years to come.
Even if consumer trends aren’t pointing to a big tax refund payday for your business, this seasonal influx of expendable money could create new sales opportunities in your local market. A digital advertising partner can help you develop a targeted ad strategy and timely messaging to connect with consumers with tax refunds in their pocket and a need for your company’s services or products. Contact us today to see how we can help.
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