Americans are scaling back spending—even as incomes rise—amid growing fears over tariffs and inflation, with new retail data signaling rising consumer pessimism and potential headwinds for the U.S. economy.
At a Glance
- Retail sales fell 0.9% in May, led by a 3.5% drop in auto sales
- Consumer pessimism jumped to 27%—up from 21% last quarter
- Over half of U.S. households cut discretionary spending in recent months
- 75% of consumers cite tariffs as a major driver of rising prices
- Middle-income families are trimming nonessential purchases to build savings
From Spending Surge to Spending Slump
Following a burst of panic buying this spring as new tariffs loomed, Americans are now pulling back on major purchases. Retail sales dropped 0.9% in May, with auto sales plunging 3.5% and spending on dining, travel, and household goods also declining, according to new government data.
Watch a report: Americans Turn Cautious as Retail Sales Slide
Tariffs Fuel Consumer Anxiety
A TransUnion consumer survey shows deepening economic pessimism: 27% of households feel financially uncertain about the year ahead—up sharply from the prior quarter. Fully 75% of respondents blame tariffs for price hikes, alongside general inflation concerns.
Americans are responding by slashing discretionary spending—cutting back on dining out, travel, entertainment, and large purchases—while prioritizing emergency savings.
Economic Impact
The retail slowdown is a warning sign for broader economic momentum. Middle-income families, in particular, are tightening budgets, which could weigh on GDP growth. While online sales and essentials remain resilient, consumer uncertainty linked to tariffs and inflation poses growing risks for retailers and policymakers alike.
As trade tensions linger, economists caution that continued belt-tightening could further dampen U.S. growth in the months ahead.
