{"id":42074,"date":"2025-07-30T11:36:22","date_gmt":"2025-07-30T11:36:22","guid":{"rendered":"https:\/\/quickassetsmarket.com\/index.php\/2025\/07\/30\/consumer-spending-in-the-us-is-slowing-is-the-economy-in-trouble\/"},"modified":"2025-07-30T11:36:22","modified_gmt":"2025-07-30T11:36:22","slug":"consumer-spending-in-the-us-is-slowing-is-the-economy-in-trouble","status":"publish","type":"post","link":"https:\/\/quickassetsmarket.com\/index.php\/2025\/07\/30\/consumer-spending-in-the-us-is-slowing-is-the-economy-in-trouble\/","title":{"rendered":"Consumer spending in the US is slowing \u2013 Is the economy in trouble?"},"content":{"rendered":"
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For two years, the American consumer has carried the economy. <\/p>\n

Even with interest rates at their highest level in two decades, spending kept climbing, job losses never came, and talk of recession faded.<\/p>\n

But the latest data and company earnings are clear: the engine is no longer revving.<\/p>\n

Although consumers are still spending, they are now doing it differently. <\/p>\n

Some big earnings this week offered a rare look at what happens when the single most important force in the US economy starts to change direction.<\/p>\n

A slowdown that is starting to stick<\/h2>\n

The headline numbers leave little room for debate.<\/p>\n

Real personal consumption expenditures (PCE) grew just 1.2% annualised in the first quarter of 2025, sharply down from roughly 4% in the final quarter of 2024, according to a report by Deloitte<\/a>.<\/p>\n

Income is slipping, too. According to the Bureau of Economic Analysis<\/a>, Personal income fell 0.4% in May, disposable income dropped 0.6%, and the savings rate is now just 4.5%. <\/p>\n

This is the lowest since 2022, indicating that households are depleting their cash buffers rather than building them up.<\/p>\n

Source: BEA<\/a><\/figcaption><\/figure>\n

While spending remains positive in aggregate, it is softening sharply in discretionary categories. <\/p>\n

The data now matches what companies are reporting: households are cautious, selective, and prioritising only what they need.<\/p>\n

Inflation and tariffs reshape household priorities<\/h2>\n

Inflation has cooled to around 2.7% year-over-year<\/a>, but tariffs remain a potential shock. <\/p>\n

A McKinsey survey<\/a> shows 43% of consumers cite rising prices as their biggest worry, and 29% point directly to tariffs.<\/p>\n

Source: McKinsey & Company<\/a><\/figcaption><\/figure>\n

This sharp shift in sentiment is changing how households spend. <\/p>\n

Consumers are delaying electronics and home goods purchases. <\/p>\n

They are trading down to private-label products and buying cheaper \u201cdupes\u201d instead of premium brands, according to The Washington Post<\/a>.<\/p>\n

Even consumer staples are not immune. Procter & Gamble says<\/a> shoppers are stretching the time between purchases and drawing down pantry stock before buying again. <\/p>\n

This indicates a defensive posture from the US consumer.<\/p>\n

Lower-income households are feeling it the most. Buy Now, Pay Later usage for groceries has spiked<\/a>. <\/p>\n

In fact, BNPL spend is set to reach record highs, surveys have shown that almost 1 in 4 users are relying on such payment methods to buy essential items.<\/p>\n

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The Kobeissi Letter<\/span><\/div>\n
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@KobeissiLetter<\/span><\/a><\/p>\n
\u00b7<\/span>Follow<\/a><\/div>\n<\/div>\n<\/div>\n

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This is concerning:<\/p>\n

Annual “Buy Now, Pay Later” (BNPL) transaction volume is expected to reach a record $116.7 billion in 2025.<\/p>\n

That would be double the 2022 total and 7 times higher than in 2020.<\/p>\n

BNPL use is exploding as consumers are increasingly searching for ways to borrow<\/span><\/p>\n

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7:56 pm \u00b7 27 Jul 2025<\/a><\/a><\/div>\n
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1.6K<\/span><\/a><\/p>\n

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