Waning demand for Apple's iPhone 13s points to consumer caution

Apple just offered a new reason to be worried about the state of the consumer. The company is telling suppliers of waning demand for its iPhone 13. The warning suggests shoppers have either satiated their appetite for new stuff or are uneasy about extravagant purchases in a world of soaring prices and a pandemic that refuses to go away. Throw in the new omicron mutation, and it’s a heady mix for shoppers.

Whatever the reason, consumer caution leaves economies facing the new virus threat with less support from goods spending — a reversal from earlier in the pandemic. 

“The story has been that we’ve seen absolutely extraordinary levels of consumer demand for goods,” UBS Group Chief Economist Paul Donovan wrote in a note to clients. “What we’re starting to see is the extraordinary demand levels are coming down.” 

In the US, a key measure of prices for consumers skyrocketed to 6.2 per cent, the highest since 1990. Across the OECD group of major economies, prices are rising at the fastest pace in almost a quarter century. For UK consumers, there’s an additional squeeze from tax hikes. That’s taking a toll on the mood among households, and their willingness to fork out for goods, including the new iPhone that costs up to $999. While high prices didn’t dent sales at US stores in October, consumer sentiment has since hit a decade-low. 

Across the Atlantic, a euro-area sentiment gauge has slipped from highs in recent months, while Britons are more worried about their personal finances. 

In China, retail sales are back below pre-pandemic growth rates as a property slowdown and virus-related caution weigh on sentiment. Consumer prices are starting to edge up too, eroding spending power. 

Recent data shows Americans spent less in the lead up to Black Friday. In the week between Thanksgiving and Cyber Monday, online sales were down 1.4 per cent YoY, Adobe Analytics says.