Americans are slashing their spending as worries over the economy grow: ‘This time feels different'

Independent

2 days ago

Americans are slashing their spending as economic uncertainty reigns six months into President Donald Trump 's second term.
A slew of new reports found that people are cutting back on everything, from buying cheaper groceries to taking fewer vacations.
Inflation-adjusted consumer spending ticked up 0.1 percent in June after declining 0.2 percent in May, the U.S. Commerce Department reported last week.
'Consumer spending had been very, very strong for the last couple of years and had — repeatedly, forecasters, not just us, had been forecasting it would slow down,' Federal Reserve Chair Jerome Powell said at a press conference last Wednesday. 'Now maybe it finally has.'
President Trump's renewed tariffs on dozens of countries took effect on August 1 with economists warning the levies would directly impact consumer prices. New federal policy research from Yale last week found that the tariffs could cost the average household $2,400 in 2025.
Then came the dismal July jobs report which apparently so angered the president that he promptly fired Erika McEntarfer, the chief labor statistician at the Bureau of Labor Statistics.
The U.S. economy added only 73,000 jobs in July, according to the Bureau of Labor Statistic monthly report. Revisions for May and June also showed a combined 258,000 fewer jobs than were initially reported.
'There's a lot of consumer anxiety,' Dirk Van de Put, CEO of Mondelez International, the company which makes Oreos and Ritz crackers, told the Wall Street Journal.
Even before Trump's renewed tariffs took effect, many Americans were already worrying about making ends meet.
Some 83 percent say they are concerned about the price of groceries, according to a June poll from survey firms, Morning Consult and The Century Foundation. Nearly half of those polled also said they're worried about their current ability to pay rent or mortgage.
And one-quarter of those asked said someone in their household has skipped meals to save cash, the poll found.
A separate poll, released Monday by AP-NORC, found that roughly half of Americans say the cost of groceries is a 'major' source of stress in their life right now.
'I just keep watching the prices go up, so I'm looking for the cheapest possible stuff,' Adam Bush, a 19-year-old based in Portland, New York who makes less than $50,000 annually, told the AP. 'Hot pockets and TV dinners.'
It's not just groceries. Sales at Chipotle were down last quarter, shoppers are buying less at the grocery chain, Kroger, and Olive Garden saw fewer customers from households that earn under $50,000 annually, the Journal reported.
Procter & Gamble, which sells a plethora of household goods including Tide, Pampers, and Charmin, also noticed a dip in sales. 'We see consumption trends consistently decelerating, not significantly, but we see a deceleration in the US,' the company's Chief Financial Officer Andre Schulten said during the company's quarterly earnings call, Bloomberg reported.
Americans are also cutting back on travel.
On average, Americans carved out $3,132 for this year's summer vacation — 25 percent less than the $4,199 they set aside to spend in 2024, according to a Ipsos-Generali Global Assistance survey last month. Another poll, by SSRS Opinion Panel Omnibus, found that 56 percent of Americans said they planned to travel less this summer compared to typical years, citing financial concerns.
Kevin Ervin Kelley, an architect living in Los Angeles, told the Journal that his family has already taken steps to reduce spending, like staying with family instead of taking international vacations and skipping date nights. While he and his wife have kept their salaries, they're worried about how tariffs could impact their wallets.
'This time feels different,' he told the outlet. 'You hunker down and wait it out.'
Others are resisting buying goods deemed 'not necessary.'
Kiara Carniewski, a 31-year-old expecting her second child this month, has been trying to significantly reduce her expenses. 'If it's not necessary, it's no longer purchased,' she told the Journal.
Days of treating herself to $5 coffees are in the rear window, she said: 'I really believe that the American economy has a massive math problem: Everything is getting more expensive but wages have not.'