Consumer spending pullback

Extracted Attributes

• Definition

  An economic indicator characterized by a decline in discretionary spending.

• Indicators

  Decline in discretionary spending intentions, soured consumer attitudes about economic outlook, reduced frequency of purchases.

• Economic Impact

  Signals a 'risk-off' phase in the market, contributes to economic downturns, can cause significant damage to the U.S. economy if sharp enough.

• Contributing Factors

  Resurgent inflation, spike in youth unemployment, economic pressures, elevated prices, slower growth, cooling labor market, tariff-induced inflation, policy uncertainty, student loan debt.

• Affected Demographics

  Observed across all income groups, but more pronounced among lower- and middle-income consumers, and younger guests.

• Economic Significance

  Consumer spending accounts for more than two-thirds of U.S. economic activity.

• Growth (2024 nominal)

  5.7% (Morgan Stanley)

• Forecast (2025 nominal growth)

  3.7% (Morgan Stanley)

• Forecast (2026 nominal growth)

  2.9% (Morgan Stanley)

Timeline

• A consumer confidence survey showed a decline in sentiment, continuing a trend of poor results tied to Trump's tariff announcements, with consumers worried about future business conditions, wages, and job availability. (Source: Web Search - Investopedia)

  2023-10

• U.S. consumer spending saw an expansion of 5.7% in nominal terms. (Source: Web Search - Morgan Stanley)

  2024

• A broad-based pullback in frequency across all income cohorts was observed, with the gap widening later for low- to middle-income guests. (Source: Web Search - Yahoo Finance)

  2024-early

• Chipotle's CEO described a meaningful pullback among the restaurant chain's younger and lower-income guests during an earnings call. (Source: Web Search - Yahoo Finance)

  2024-05-01

• US consumers reported feeling nearly as optimistic as at the end of the previous year, but spending intentions were down across several discretionary categories. (Source: Web Search - McKinsey)

  2025-Q1

• Morgan Stanley Research forecasts year-over-year nominal spending growth to weaken to 3.7%. (Source: Web Search - Morgan Stanley)

  2025

• The cooldown in consumer spending is likely to be more pronounced. (Source: Web Search - Morgan Stanley)

  2025-Q4 to 2026-Q1

• Morgan Stanley Research forecasts year-over-year nominal spending growth to further weaken to 2.9%. (Source: Web Search - Morgan Stanley)

  2026

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Web Search Results

• An update on US consumer sentiment | McKinsey

  The most striking development is the sharp decline in discretionary spending intentions. Although higher-income consumers are somewhat less affected by this pullback, this trend is observed across all income groups. This underscores a broader, cautious approach to spending as economic pressures continue to shape consumer behavior. [...] In the first quarter of 2025, US consumers reported feeling nearly as optimistic as they did at the end of the previous year. This optimism was buoyed by a robust economy with low unemployment, steady job growth, and stable inflation. However, for US consumers across income groups and generations, spending intentions were down across several discretionary categories. Unlike in early 2024 (when consumers carried their approach to holiday spending into the new year), consumers this year reverted

• Consumers Prop Up the Economy. They're Showing Signs of Strain.

  President Trump’s tariffs and their scattershot rollout have once again raised concerns that the United States may soon face an economic downturn. While the odds of an outright recession have fallen as the highest levies have been paused, there are reasons to be worried about the ability of consumers to continue to prop up growth. Consumer spending accounts for more than two-thirds of U.S. economic activity, meaning a sharp enough pullback could cause significant damage. [...] For now, consumers are still spending, although more slowly than in the past. Their attitudes about the economic outlook have soured in recent months in anticipation of elevated prices, slower growth and higher unemployment. Americans have also become choosier about how they spend their money. Leisure and business travel has declined. People are buying fewer snacks and eating out less as they look to cut costs. They are even doing fewer loads of laundry to save money. [...] U.S. Economy Advertisement Comments Consumers Prop Up the Economy. They’re Showing Signs of Strain. By Colby Smith and Christine Zhang The U.S. consumer has seemed unstoppable in recent years, spending throughout soaring inflation and the highest borrowing costs in decades. That resilience helped to keep at bay a recession that many thought inevitable after the pandemic. Consumer spending has fueled the economy Year-over-year percentage change in retail and food service sales RECESSIONS

• Why Americans Are Still Spending Big—Even as Inflation and Job ...

  Consumer spending makes up about two-thirds of U.S. economic activity, helping to support jobs, wages, and financial markets. Any pullback can cause negative effects to ripple throughout the economy. [...] October's consumer confidence survey, released earlier this week, showed a decline in sentiment, continuing a trend of poor results tied to Trump’s tariff announcements.2 The monthly Conference Board report showed that a weak labor market has consumers worried about future business conditions, wages, and job availability. It also indicated that holiday spending would fall this year.

• U.S. Consumer Spending Trends to Watch in 2025 - Morgan Stanley

  After starting 2025 on solid footing, U.S. consumer spending is likely to weaken through the rest of the year and into 2026 as households feel the effects of tariffs and economic uncertainty. Morgan Stanley Research forecasts year-over-year growth of 3.7% for nominal spending in 2025 and 2.9% in 2026, compared with an expansion of 5.7% in 2024. The cooldown is likely to be more pronounced in the last quarter of 2025 and the first three months of 2026. [...] Growth in U.S. consumer spending is likely to weaken to 3.7% in 2025 from 5.7% in 2024. Consumption is still showing resilience as unemployment remains low and consumers buy ahead of tariff-related price increases. Spending is likely to cool more visibly among lower- and middle-income consumers. The U.S. housing market, which has been held back by high mortgage rates, could expand at a higher pace in 2026. Consumer credit delinquency is on the rise, while defaults are below expectations. [...] “There are three main reasons behind the slowdown: the cooling labor market, tariff-induced inflation, and policy uncertainty weighing on consumers and businesses,” says Morgan Stanley Global Economist Arunima Sinha. “Additionally, the housing market remains largely stuck and consumer credit shows a mixed picture: delinquencies have been rising, while default rates are still contained.” ### Affluent Will Carry Consumer Spending

• 'A little concerning': 2 crucial consumer groups under pressure are a ...

  But that strength at the top isn't being felt across the board, and companies tied to everyday consumers may be starting to feel the squeeze. On Chipotle's earnings call on Wednesday, CEO Scott Boatwright described a meaningful pullback among the restaurant chain's younger and lower-income guests, sending shares down nearly 20% on Thursday. [...] "Earlier this year, as consumer sentiment declined sharply, we saw a broad-based pullback in frequency across all income cohorts," Boatwright said. "Since then, the gap has widened, with low- to middle-income guests further reducing frequency." NYSE - Nasdaq Real Time Price • USD # Chipotle Mexican Grill, Inc. (CMG) 30.22 -0.34 (-1.11%) As of 2:26:14 PM EST. Market Open. Advanced Chart [...] "Lower-income Americans are pulling back while higher earners continue to spend," he said. "And so we think there's something there." Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie\_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com Click here for the latest stock market news and in-depth analysis, including events that move stocks Read the latest financial and business news from Yahoo Finance Terms and Privacy Policy Privacy Dashboard