Key Indicators Of Consumer Spending Trends

The early signals are here. And they look familiar. We’re seeing the return of two major patterns on Amazon: 📉 Consumers are trading down 📦 Some categories are showing stockpiling behavior This moment reminds me of early COVID—lagging economic impact, real-time shifts in behavior, and executive teams urgently revisiting their assumptions. At Momentum Commerce, we analyzed the top products on Amazon and found that the 𝐚𝐯𝐞𝐫𝐚𝐠𝐞 𝐬𝐞𝐥𝐥𝐢𝐧𝐠 𝐩𝐫𝐢𝐜𝐞 (𝐀𝐒𝐏) 𝐢𝐬 𝐝𝐨𝐰𝐧 𝟎.𝟖% 𝐲𝐞𝐚𝐫-𝐨𝐯𝐞𝐫-𝐲𝐞𝐚𝐫. But it’s not because brands are lowering prices. It’s because 𝐜𝐨𝐧𝐬𝐮𝐦𝐞𝐫𝐬 𝐚𝐫𝐞 𝐜𝐡𝐚𝐧𝐠𝐢𝐧𝐠 𝐰𝐡𝐚𝐭 𝐭𝐡𝐞𝐲 𝐛𝐮𝐲. 🔹 In 𝐃𝐢𝐚𝐩𝐞𝐫𝐬, historic top sellers (which have raised prices +6.0% YoY) are losing share to cheaper alternatives—today’s top sellers are down -3.9% in ASP. 🔹 In 𝐕𝐚𝐜𝐮𝐮𝐦𝐬 & 𝐅𝐥𝐨𝐨𝐫 𝐂𝐚𝐫𝐞, ASPs for historic best sellers are up +14.4% YoY—consumers are shifting to more affordable models. 🔹 In 𝐒𝐤𝐢𝐧 𝐂𝐚𝐫𝐞 𝐚𝐧𝐝 𝐏𝐞𝐭 𝐒𝐮𝐩𝐩𝐥𝐢𝐞𝐬, we’re still seeing pricing resilience. These are the “affordable luxuries” consumers are holding onto—for now. 🔹 And in 𝐁𝐚𝐛𝐲 𝐅𝐨𝐫𝐦𝐮𝐥𝐚, we just saw a 26x week-over-week unit sales spike. That’s a clear sign of stock-up behavior taking root. Brands are responding—fast. The smartest ones are running the playbook we saw work in 2020: 1️⃣ Renegotiating with suppliers 2️⃣ Raising prices selectively on inelastic SKUs 3️⃣ Accelerating shipments before tariffs hit harder 4️⃣ Tracking consumer behavior weekly, not quarterly And yes, this all reminds me of Hitchhiker’s Guide to the Galaxy. The cover famously reads: “Don’t Panic.” For brands right now, it’s a useful mantra. But it only works if it’s followed by a plan. We’re helping our clients write that plan: ✅ Real-time category pricing trackers ✅ Trade-down indicators ✅ Margin risk diagnostics ✅ One-on-one strategy sessions and playbooks Our data tells the story. Our job is to help you write the next chapter.

As we head into summer 2025, I’ve been watching the market like everyone. Something I've watched for years has gotten a lot less attention lately - the personal saving rate. In March, it dropped to 3.9% — significantly below the long-term average of 8.4% and a notable decline from 5.2% in March of last year. And like so many things - this datapoint isn’t just a number, it tells a story. In 2020 and 2021, American savings surged thanks to stimulus checks and reduced spending during lockdowns. At one point, the saving rate spiked above 30%. That savings were spent online in ecommerce, in paying down student debt and on hundreds of other things. But fast forward to today - that cushion has largely evaporated. Over the past few months, there's mounting evidence that Americans are feeling uncertain about the economy. But I haven't seen data showing spending slow yet. But lower savings means fewer safety nets and that will inevitably change behavior. I think we'll start to see more conservative spending on big-ticket items and more value-conscious shopping overall. Travel is still happening - might we see shorter trips, closer to home this summer? When savings go down, discretionary spending ought to follow. All business leaders and marketers should watch this to see if these are early of that shift — maybe not a spending cliff, but a cooling. Businesses that rely on consumer optimism and impulse purchases may start to feel a drop conversion rates and average ticket sizes. Consumer spending fuels nearly 70% of our GDP. So while the market continues to focus on inflation, rates, and job numbers — I'm keeping an eye on how much money is actually sitting in people’s accounts. New numbers come out on May 30 - we'll see what they show then.

This analysis of consumer behavior in response to tariffs as of March 13, 2025, highlights significant shifts in purchasing patterns, industry impacts, and economic sentiment. Here’s a more structured breakdown: 📊 How Tariffs Are Shaping Consumer Behavior in 2025 1️⃣ Higher Prices for Imported Goods Tariffs increase the cost of imports, leading to higher prices for consumers. Industries most affected: Food & Beverage: Rising food import costs impact groceries and restaurants. Alcohol Industry: European wines and spirits face potential steep tariff hikes. Consumer Goods & Electronics: Higher costs for imported raw materials and components. 2️⃣ Shifting Purchasing Patterns Faced with rising prices, consumers are adapting in different ways: ✔ Buying domestic products to avoid tariff-inflated costs. ✔ Exploring alternative markets (e.g., purchasing from countries not subject to tariffs). ✔ Reducing consumption of tariff-affected goods, leading to potential demand shifts. 3️⃣ Consumer Sentiment & Potential Boycotts Trade disputes and tariffs fuel negative consumer sentiment. Potential boycotts of goods from countries involved in trade conflicts. Emotional responses to trade policies are influencing shopping decisions. 4️⃣ Economic Uncertainty & Spending Habits Tariff-related trade tensions create widespread uncertainty, leading to: ✔ Reduced consumer spending due to concerns over inflation. ✔ Increased savings as households brace for possible economic slowdowns. ✔ Delayed major purchases in categories like automobiles and electronics. 5️⃣ Factors That Will Shape Future Behavior Tariff severity & duration: Long-term tariffs may permanently alter consumer habits. Political climate: Policy shifts and trade negotiations can quickly change outlooks. Public perception: How tariffs are framed (protectionism vs. economic burden) will influence consumer reactions. 🔎 Key Takeaway Consumers in March 2025 are highly adaptive, making strategic purchasing decisions to mitigate tariff impacts. Industries reliant on imports, particularly food, alcohol, and retail, are bracing for significant changes. Would you like insights on specific industries or regions? 🌎

As an economist closely tracking consumer trends, the latest insights on the American middle class are both revealing and concerning. According to a recent WSJ report, the once-steady financial optimism among middle-income households—those earning roughly $53,000 to $161,000 annually—has sharply declined this summer, following modest gains earlier in the year . A nearly 6% drop in consumer sentiment in August signals a growing unease among this cohort, particularly among those earning $50,000–$100,000, whose outlook now mirrors that of lower-income groups . This reversal is being felt in real time across industries: #Retailers like Walmart, Dollar General, and Kohl’s report middle-class shoppers trading down—choosing generic brands, delaying non-essentials, and cutting back on discretionary purchases . #Automotive services, fashion, and retail sectors likewise note a pullback from this vital demographic . #Dining and food services, chains such as IHOP, Denny’s, and even McDonald’s observe a shift toward value, with middle-income consumers seeking promotions and lower-priced items . High-end sectors remain resilient: premium travel, luxury goods, and medical aesthetics—particularly anti-wrinkle treatments—continue to draw spending from higher-income groups, highlighting a growing bifurcation . Underlying these behavioral shifts are broader economic headwinds: inflation, tariff-induced cost pressures, and stagnating wage growth. The result? A rapidly widening confidence gap between high-earning Americans and those in the middle and lower brackets—the largest we've seen in seven years of tracking . Implications and Takeaways for Economists & Leaders: 1. Consumer Sentiment as a Leading Indicator--Declining optimism among middle-income households often precedes economic slowdowns in consumer-driven sectors. Monitoring mood shifts can help anticipate changes in spending behavior. 2. Policies Must Address the Middle Layer Strategies to relieve tariff pressures, control inflation, and boost real income growth are essential to restoring middle-class confidence and spending power. 3. Business Adaptation Is Key Companies that can strengthen value propositions—through affordable essentials, promotional offerings, or cost-efficient innovation—are better positioned to retain a squeezed middle consumer base. 4. Long-Term Economic Stability Depends on the Middle Class A thriving middle class is the core of aggregate demand, social mobility, and democratic stability. What are your observations from consumers or clients amid this shift? Are you seeing a similar tightening of belts in your industry or community? https://lnkd.in/eAmatJtS

#Retail and #food services #sales ticked up a modest 1.8% during Jan-Feb 2025 from one year ago. This is a modest increase and, moreover, the increase is actually due to #inflation/higher prices of 2.8% based on the #CPI inflation in February rather than a real uptick in spending. But more importantly, the increase in spending came from items that can be considered as discretionary, which could easily slow in the coming months: #food service and drinking places (+1.5%), #furniture and #home furnishings (+3.8%), motor #vehicles and parts dealers (+2.6%), #building material and garden supplies (+2.5%). Taking a look at percent share of spending, motor vehicles and parts dealers retail sales account for the largest share of retail and foods services sales, at 19.2% during Jan-Feb 2025. Food and service drinking places sales is the next largest, at 13.6% of total retail and food services sales. #Gasoline stations retail sales accounts for 7%. Building materials, garden equipment and supplies dealers sales made up 5%. With the 25% #tariffs on vehicles, the 10% baseline tariff on all #imports, and the now 105% tariff on imports from #China, spending for these discretionary items could likely be put off and could result in a contraction in consumer spending, greatly increasing the risks of an #economic contraction with high prices (#stagflation). The Federal Reserve Board's G.10 #Consumer Credit Report released April 7 shows a decline in consumer credit in February 2025, at an annualized rate of $324.6 billion. The latest business and consumer confidence indicators suggest slower spending ahead. The #Michigan #Consumer #Sentiment Index slumped to 57 in March 2025 (lowest reading since November 2022). The #NFIB #Business Optimism Index fell to 97.4 in March 2025 (the largest decline since June 2022). In 2024 Q4, #GDP rose at an annualized rate of 2.4%, with personal consumer spending up a hot 4.0%. But the recent data on consumer credit, retail sales and food services, and consumer and consumer confidence all point towards weaker consumer spending already happening and moving forward. If this last good leg of the economy buckles, the economy is likely to contract with no offsets to the decline in #investment spending, #federal spending, and net #trade. Miami Association of Realtors

EY-Parthenon EY Macro Pulse Tariff Whiplash: Consumer Spending Stalls After March Surge 🛍️Retail sales rose a scant 0.1% in April, following an upwardly revised 1.7% surge in March. Excluding #spending at restaurants and bars, retail sales fell 0.1% reflecting a pullback in goods spending following the rush to front-run tariffs in March. We believe the April figures are overstated given some of the demand front-loading likely bled into the early part of the month. In the coming weeks, we expect price-sensitive consumers will become more selective with their purchases as tariff-driven inflation takes a bite out of spending power. 📉 ‘Control’ #retail sales – which is a key gauge of broader consumer spending trends that strips out the volatile components – contracted 0.2%, following an upwardly-revised 0.5% gain in March. The latest data point to weaker spending momentum at the start of Q2 and is in line with our expectations for slower consumer outlays growth around 1.4% annualized in Q2. 🚗 Motor vehicles sales (-0.1%) fell slightly after the rush to buy cars at pre-tariff prices in March. Since some of this rush likely filtered into early April, we expect more weakness in May and June – remember, the car you bought last month won’t be bought again! Consumer also spent less at gasoline stations as sales fell for a third consecutive month in April (-0.5%), reflecting lower volumes and lower prices at the pump. 🛒 Several of the spending categories that drove the March surge in sales experienced a pullback in April. Sales of recreational and sporting goods (-2.5%) fell markedly after rising by the most in three years. Sales of clothing (-0.4%) and health and personal care products (-0.2%) also fell after seeing significant gains in March. In contrast, sales of building materials (+0.8%), furniture (+0.3%) and electronics (+0.3%) saw moderate increases while online sales (+0.2%) saw another positive albeit subdued gain. 🍽️ One notable item in the report was spending at restaurants and bars (+1.2%) which grew strongly for a second consecutive month – the gain comes on the heels of an upwardly revised 3% jump in March (previously +1.8%). This is a sign that despite the elevated uncertainty, services spending likely held up well during the month. ⚠️ Overall, the detail of the report suggests that consumers pulled back after a rush to front-run #tariffs, but higher-income families were still willing and able to spend on services. Looking ahead, consumers will continue to be more selective and cautious with their spending as inflation reaccelerates and interest rates remain elevated. Indeed, consumers now face an average tariff rate of 14%, the highest level since the early 1940s. And pre-emptive #inflation anxiety (PIA) is already weighing on consumer morale, with sentiment gauges continuing to plunge and inflation expectations rising. Read the full note here via Lydia Boussour https://lnkd.in/dmpGXN_m