What: Young Americans are redefining necessity spending to include traditionally nonessential items like streaming services and beauty products, reflecting a fundamental shift in consumer values despite economic uncertainty.

Why it is important: The evolution of consumer priorities demonstrates how digital services and personal care have become fundamental to modern lifestyle, requiring retailers to adapt their business models and value propositions accordingly

A recent Credit Karma survey reveals a significant shift in how young Americans view necessity spending amidst economic uncertainty. While 74% of Gen Z and 82% of Millennials indicate they would consider reducing nonessential spending if their financial situation worsens, paradoxically, 87% of Gen Z and 84% of Millennials consider certain nonessential items as necessities they won't forgo. Streaming services emerge as the top "new necessity" across generations, with 36% of Gen Z and 37% of Millennials prioritising these subscriptions. In the beauty and fashion sector, skin care products (27% Gen Z, 26% Millennials) and new clothes (23% Gen Z, 19% Millennials) rank high on the necessity list. The survey, conducted by The Harris Poll among 2,000 U.S. adults, also found that over half of young consumers would rather reduce long-term savings than give up lifestyle experiences. Social media significantly influences this mindset, with 60% of Millennials and 53% of Gen Z citing its impact on their spending decisions.

IADS Notes: Recent market research strongly validates the shifting definition of necessities among young consumers. As reported in February 2025, Gen Z's projected spending power of USD 13 trillion by 2030 is reshaping retail strategies, particularly in how brands categorise and market essential versus discretionary items. This aligns with October 2024 findings showing Gen Z's $360 billion current spending power driving demands for personalised experiences. The trend toward digital services as necessities is further supported by November 2024 Euromonitor data, revealing 67% of consumers prioritising convenience through digital solutions. The resilience of beauty and fashion spending, despite economic pressures, is evidenced by January 2025 reports of a 23% increase in beauty spending among young consumers. This phenomenon is particularly interesting when considered alongside February 2024 Visa research highlighting Gen Z's "split-brain budgeting" approach, where they balance essential spending with selective splurges, often enabled by parental financial support.

Gen Z and Millennials are redefining what items are ‘necessities’