In economics, a sudden change in consumers’ willingness or ability to buy is called a demand shock.
A positive demand shock shifts the demand curve to the right, while a negative demand shock shifts it to the left. Causes may include changes in consumer confidence, income, government spending, monetary conditions, population, or expectations about the future.
A demand shock can affect both prices and output. If firms can expand production quickly, output may respond strongly. If capacity is tight, prices may rise more sharply. The eventual effects also depend on how long the shock lasts and how flexible the market is.
A demand shock is distinct from a supply shock, which originates in production conditions. During a major economic downturn, for example, falling confidence and spending can create a negative demand shock across many industries.