Consumer Spending Behavior and Economic Recession in Anambra State: Evidence from 2020 to 2023

Economic recessions fundamentally alter household spending behavior, compressing consumption of non-essential goods while reallocating expenditure toward necessities, with lasting implications for aggregate demand. This study investigates consumer spending behavior during Nigeria's economic recession period of 2020 to 2023, with specific focus on Anambra State households. The study is anchored on the Permanent Income Hypothesis (PIH) as advanced by Milton Friedman, which posits that consumers base spending decisions on their long-run expected income rather than on temporary income fluctuations. A survey research design was adopted, targeting households across income strata in five senatorial districts of Anambra State. From an estimated population of 820,000 households, a sample of 400 respondents was drawn using multi-stage stratified sampling. Structured questionnaires and focus group discussions served as data instruments. Findings indicate that 71 percent of surveyed households significantly curtailed spending on education, clothing, and entertainment during the recession years, while food expenditure remained relatively stable as a proportion of total spending. Households in the lower income quartile exhibited the sharpest reduction in non-food consumption, contrary to PIH predictions, suggesting liquidity constraints override long-run income smoothing behavior for this group. The study concludes that recessionary conditions produce differentiated spending adjustments across income groups in Anambra State. It is recommended that government safety net programs be calibrated to the specific consumption vulnerabilities of low-income households during economic downturns.

Keywords: Consumer spending, economic recession, permanent income hypothesis, Anambra State, household behavior