No matter how much you earn, chances are you’re feeling the financial squeeze in 2025. From the working class to the well-heeled, a wave of consumer caution is sweeping the U.S., driven by persistent inflation, tariff uncertainties, and recent economic projections showing increased chances of recession tied to President Trump’s latest policy proposals. Here’s look at what’s unfolding and why it’s hitting every income level.
Key Summaries:
- Retailers are reporting weaker demand than at the start of the year due to cautious consumer spending.
- Consumer spending is slowing down across all income levels due to tariff concerns and inflation.
Everyday Spending Takes a Dive
Shoppers are pulling back, and it’s not just the big-ticket items they’re skipping. According to Citigroup spending has dropped across the board—groceries, car repairs, even pet supplies aren’t immune. Clothing sales have cratered 12% compared to last year, and athletic shoes? Down 22%. At Walmart, executives are seeing customers opt for smaller, cheaper packs as the month wears on—a telltale sign of stretched budgets. Similar results are reported by mass affluent retailer Costco. In their most recent earnings call Costco Chief Financial Officer Gary Millerchip said consumers are switching to lower cost proteins like chicken and ground beef.
This isn’t just a low-income story. The relentless rise in costs for essentials—rent, utilities, and food—has left little breathing room for people of all socio-economic classes.
High Earners Join the Hesitation Game
Surprisingly, this economic pressure isn’t limited to those scraping by. Affluent Americans, who’ve ridden a stock market high thanks to advances in AI technology, are also tapping the brakes. Airlines are a prime example: Delta, Southwest, American, and JetBlue have all trimmed their outlooks as travel demand softens. Delta’s CEO pointed to a broader dip in consumer optimism, a signal that even those with deeper pockets are feeling the unease.
The economic seesaw has flipped too. A few years ago, blue-collar workers enjoyed robust wage hikes while the wealthy felt a “Richcession.” Now, low-income wage growth has flatlined since 2023, and government aid like expanded food stamps has dried up. At the same time, Bank of America data shows cash reserves shrinking for everyone—checking and savings accounts are nearing pre-pandemic levels when adjusted for inflation. Basically summarized – consumers have less income and less cash on hand than before then pandemic.
The Headlines Stirring the Pot
What’s fueling this coast-to-coast caution? For one, President Trump’s aggressive use of tariffs and muscular cost cutting have rattled markets. Tariff threats—and the global retaliation they’ve sparked—are keeping businesses and shoppers on edge. In addition, February’s inflation report showed that while prices cooled a bit, they were not enough to offset fears of costlier imports.
Retailers are feeling the fallout. Target, Foot Locker, and Lowe’s all posted lackluster February results, hinting that consumers are delaying everything from new shoes to home upgrades. It’s a waiting game—shoppers are holding their breath, and their cash, for now.
A Wait And See Mood In The Country
The national vibe is unmistakable: Americans are hunkering down. Whether it’s a low-income family skipping a burger run or a high earner passing on a weekend flight, the data paints a picture of a nation rethinking its spending habits. The question is how long this cautious streak will last—and what it’ll mean for the economy at large. For now, one thing’s clear: from the bottom of the income ladder to the top, no one’s immune to the uncertainty of 2025.
Author’s contact: james@districtmediafinance.com
Editors Note: This article was generated with the assistance of Artificial Intelligence
Image source: Flickr.com
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.
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