Goldman Sachs The Markets
Is the US consumer in trouble?
Feb 28, 2025
Consumer sentiment in the U.S. is on a sharp decline, raising concerns about the overall strength of the consumer base. Factors like tariffs and job cuts are affecting spending patterns, with consumers leaning more towards services than goods. Investment opportunities in health and wellness, travel, and grocery sectors are emerging amidst these changes. Despite challenges, shopping behaviors remain resilient, showing optimism for better weather and upcoming job reports could boost retail performance and economic confidence.
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Quick takeaways
- Recent sharp declines in consumer sentiment, driven by tariffs and inflation worries, could lead to reduced spending in various sectors.
- Prominent retailers that offer value are thriving while lesser-known brands struggle, highlighting consumers' selective purchasing behavior in the current market.
Deep dives
Declining Consumer Confidence
Recent consumer sentiment surveys show significant drops in confidence among U.S. consumers, marking the largest declines in four years. Factors such as tariffs and rising inflation expectations have contributed to this negative outlook. As a result, many consumers express uncertainty about their spending habits, which may impact various sectors such as restaurants and retail. The initial earnings reports for the first quarter indicate a slowdown, suggesting a correlation between declining confidence and slower consumer spending.
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