American consumers are in retreat. Buffeted by an extended period of supply chain disruption and inflation triggered by the COVID pandemic, still beset by persistently high prices and now facing new uncertainty stemming from the Trump administration’s tariff policies, they show every sign of pulling back.
The Conference Board reports that in March consumer confidence hit a four-year low, in the wake of the biggest one-month decline since the summer of 2021. That was before the full extent of the Trump tariffs was known. Shortly after the president unveiled details of the plan on what he called Liberation Day in early April, Morning Consult’s Index of Consumer Sentiment registered its second-largest two-day decrease since the beginning of the pandemic in March 2020.
The trend is already influencing shopping behavior. During Dollar General’s recent quarterly earnings call, CEO Todd Vasos described the situation: “Our customers continue to report that their financial situation has worsened over the last year, as they have been negatively impacted by ongoing inflation. Many of our customers report they only have enough money for essentials, with some noting that they have had to sacrifice even on the necessities. As we enter 2025, we are not anticipating improvement in the macro environment, particularly for our core customer.”
New research from Circana shows weakened consumer activity across the retail spectrum. As prices have risen since the start of the pandemic, demand has in turn declined, a tendency augmented, as Circana points out, by such factors as rising debt levels, extreme weather and natural disasters, and concern among the Hispanic population about deportation policies. The pattern is particularly evident in non-edible packaged goods and general merchandise.
“Dynamic shifts in consumption are already occurring across consumer groups and retail segments,” says Marshal Cohen, Circana’s chief retail industry advisor. “The consumer is in a state of confusion and trying to decipher how to prioritize their purchases in an environment of significant change.”
Retailers would do well to respond quickly to the ongoing shift in consumer sentiment. As more shoppers experience increased stress over their personal finances, as well as larger economic uncertainty, they will inevitably gravitate to stores that deliver the most bang for the buck.
