Consumers are the most pessimistic about the future in 12 years, one poll suggested
Several major American retail chains have shed share price value amid a new consumer spending report showing a drop-off in consumer spending.
The report, published on Tuesday by consumer financial services firm Synchrony Financial, argues that consumers are beginning to curb their spending in response to increasing prices and a worsening economic picture.
The markets seemingly reacted, with American supermarket chains Walmart and Target stock dipping 1.9% and 1.4% respectively by midday.
Both brands have recently stated that U.S. consumers are being careful with spending, opting for lower-priced items or waiting for deals.
CVS, the USA’s second-largest pharmacy chain, also shed 1.6% of its value by noon on Tuesday.
The belt-tightening is an indicator of Americans preparing for incoming financial strain, Synchrony chief credit officer Max Axler told Reuters.
“Purchase volumes have gone down across the industry as consumers across all income groups become more thoughtful about spending.”
A worsening economic climate
Moreover, a fresh poll from non-profit research organization The Conference Board suggests that American households are the most pessimistic about economic outlook in 12 years.
The Board’s consumer confidence index slid 7.2 points to 92.9 this month, it announced on Tuesday, despite economists polled by Reuters forecasting the index falling to 94.
The findings represent a continuation of recent economic trends, with the Federal Reserve revealing in a February report that Americans have been accumulating more debt.
The report said delinquencies for car loans, credit cards, and home credit lines all edged up in the final quarter of 2024, while overall debt levels have increased by $3.9 trillion since the end of 2019.
However, the report went on to argue that borrowing levels relative to income are “pretty stable”, and still below pre-COVID levels.
“Consumers are in pretty good shape in terms of the household debt landscape, largely driven by stable balances and solid performance in mortgage loans.”
