US consumer spending increased 0.4% in February, but at a slower pace than expected. This boost in spending contributed to a higher savings rate of 4.6%, the highest since June 2024.
Experts point to economic uncertainty and growing caution among Americans as factors contributing to this slowdown. Consumer confidence has fallen to a 12-year low, with the Conference Board’s expectations index dropping to 65.2. This is below the threshold of 80 that usually signals a recession ahead.
Businesses are also feeling the impact, with some slashing their earnings forecasts amid concerns over consumer behavior. FedEx lowered its full-year forecast for adjusted profit, while Delta Air Lines and American Airlines also dropped their projections due to lower consumer confidence.
The slowdown in spending is attributed to various factors, including tariff headwinds, inflationary pressures, and uncertainty surrounding global trade policies. Companies are warning of a potential economic hit from tariffs on China and reduced demand for discretionary products.
“This month’s decline reflects a clear consensus across all demographic and political affiliations,” said Joanne Hsu, director of the University of Michigan’s consumer sentiment survey. “Consumers are expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation.”
Source: https://fortune.com/2025/03/30/consumer-confidence-inflation-tariffs-comerica-fedex-delta-american-airlines-lululemon-walmart-eagle