American consumers are closing their wallets again. The uncertainty in the economy, high prices, and tariff burdens have led to a shift in consumption patterns towards "expenditure reduction." As bulk buying, coupon usage, and a preference for low-cost brands spread, the bold spending habits seen after the COVID-19 pandemic are rapidly decreasing.
The Wall Street Journal (WSJ) reported on the 3rd (local time) that "American consumers have returned to a savings-focused spending approach." Consumer expenditure remained stagnant in the first half of the year, and major retail and consumer goods corporations noted that "consumers are feeling economic pressure." Particularly, there has been a trend of reducing consumption among high-income groups above the middle class.
Mondelez, which owns snack brands like Oreo, Ritz, and Cadbury, reported a decline in sales in the United States. Although global sales increased, it was noted that only American consumers are uniquely closing their wallets. Chipotle saw a drop in premium burrito sales, while Domino's Pizza expanded promotions such as buy two, get one free to attract customers. Consumer goods corporation Procter & Gamble (P&G) explained that consumption of essential brands like Tide, Pantene, and Charmin is showing signs of slowing down. Invisalign noted a decrease in demand for transparent aligners and a shift towards metal braces.
Sales strategies of large retailers are also changing. Kroger noted that while the frequency of customer visits to stores has increased, the number of items placed in baskets has decreased. Average purchase value per basket dropped, while the share of sales for low-cost private label products increased. Corporations are enhancing discount coupons and bundle sales of essentials in response to these changes in consumer patterns.
This atmosphere is closely related to the policy environment. The Trump administration's expansion of tariffs and trade renegotiations have caused a general rise in prices of imported consumer goods, including automobiles, coffee, and daily necessities. Ford Motor Company has raised prices on some vehicles, and additional tariffs of up to 50% have been reflected in everyday food and beverages like coffee. Most tariffs have been passed on to consumer prices, leading to a rise in perceived prices.
As economic uncertainty grows, consumers have begun to manage their spending. A consumer living in Los Angeles said, "In the past, if my child wanted a new bag, I would buy it, but now I'm making them use the bag we bought last year," adding that spending habits associated with an attitude of "'so what'" have completely disappeared. Another consumer reflected on their spending habits, saying, "After canceling subscription items one by one, I realized I already had enough stock at home."
Consumption control is becoming routine across all demographics, including college students, middle-class workers, and young couples. A college student in Detroit said, "I didn't use coupons before, but now I'm going to various supermarkets comparing the lowest prices and have installed all the coupon apps." According to a survey conducted in June by Empower, a 401(k) asset management corporation in the U.S., more than half of American adults spend about four hours a day on "money issues," corresponding to a "part-time job-level" commitment.
According to a survey conducted by consulting corporation McKinsey in May, the biggest concern among consumers was "rising prices." The anxiety concerning prices has outweighed fears about immigration, international conflicts, and political polarization. A majority of respondents indicated that they are adjusting their expenditures due to the price increases caused by tariffs.
The current trend of reduced consumption is analyzed as a structural response related to a general economic downturn rather than a short-term fad. WSJ stated, "American consumers are no longer spending emotionally and are approaching the act of purchasing strategically." Experts predict that this form of consumption is likely to persist for some time.