Consumers are getting gloomier — just before the holidays
A majority of consumers polled by Deloitte said they think the economy will weaken over the next 12 months. Many are planning to spend less this year
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With the holiday shopping season approaching, consumers are more downbeat on the economy than at the same time during the global financial crisis, according to an annual fall survey.
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A majority of consumers polled by Deloitte, 57%, said they think the economy will weaken over the next 12 months, according to CNBC. That's the worst outlook recorded by Deloitte since it began the annual survey of about 4,000 people in 1997. This time last year, the figure was 30%, and even in 2008 it was only 54%.
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“We’ve been talking about the resilient consumer for a while now, that despite all these pressures, the U.S. consumer continues to spend and we keep seeing growth and spending for retail,” said Brian McCarthy, retail strategy leader for Deloitte. “This outlook is starting to suggest that we’re getting towards the end of that resilience.”
President Donald Trump’s wave of tariffs has already sparked concern about price increases this year. A recent analysis from Goldman Sachs indicated that just over half of the tariff costs, or 55%, will be shouldered by American consumers this year.
Last month's inflation report indicated that prices were ticking up for clothes, furniture, groceries, car parts, and other tariff-sensitive products.
According to the Deloitte poll, 77% of respondents said they think holiday items will cost more this year, up from 69% who said the same last year.
That pessimism is leaking into how much consumers plan to spend this holiday season. Respondents said they intend on spending an average of $1,595, down about 10% from $1,778 this time last year, as they try to insulate themselves from the expected price increases. The planned belt tightening was especially pronounced among Gen Z shoppers, who said they plan to spend about one-third less this holiday season than last.
McCarthy said younger shoppers are “thinking about income and the job market and the concerns about the economy is going to throw a lot more pressure on them because they haven’t yet had time to sort of build up their savings or plan for less rosy economic environments.”