KPMG Summer 2025 Consumer Pulse: Findings Reveal Rising Economic Anxiety Reshaping How Consumers Spend, Save, and Live

NEW YORK — April 24, 2025 — KPMG’s latest Consumer Pulse Summer 2025 report paints a sobering picture of the consumer: more cautious, more cost-conscious, and more selective than they’ve been in years. Amid inflation, shrinking incomes, and growing tariff concerns, the report’s findings suggest a “make it count” mindset is taking hold — and reshaping everything from retail to travel to wellness.

In a nationally representative survey of 1,516 U.S. consumers, nearly 4 in 10 consumers report a decline in household income — nearly double last year’s figure — while over 70% say a recession is likely within the next 12 months.

“Consumers aren’t just belt-tightening — they’re rethinking value altogether,” said Duleep Rodrigo, KPMG’s Consumer and Retail Sector Leader. “It’s not only about cutting back; it’s about being intentional with every dollar spent. In this environment, trust, transparency, and tangible impact matter more than ever. To win today’s consumer, brands need empathy, innovation, and a clear reason to matter."

Tariffs in the Spotlight

Tariffs have once again become a major concern for consumers, with widespread expectations of price hikes in groceries, electronics, apparel, and automotive products. The latest Consumer Pulse report reveals a sharp increase in consumer anxiety over rising prices, driven by the reintroduction of tariffs.

As U.S. trade tensions mount, consumers are connecting the dots between tariffs and their weekly receipts:

• Price Hike Horizon: 79% expect tariffs to drive even higher prices in the months ahead—consumers are bracing for impact. Over half of consumers say rising prices are driven by tariffs, with groceries, electronics, and apparel hit hardest.
• Tariff Tactics: In response to tariffs, 50% are cutting back on purchases, and 49% are actively seeking deals and discounts.
• Recession Reality: Over 70% of consumers now expect a recession within the next 12 months—a sharp spike in pessimism that’s driving more cautious behavior.

““Tariffs have gone from background noise to front and center for consumers—and their grocery receipts show it. Shoppers are more price-sensitive than ever, and many are connecting rising costs directly to tariffs. That growing awareness is reshaping spending habits, and retailers will need to recalibrate fast to keep pace.”– Heather Rice, KPMG Consumer and Retail Tax Leader

Household Economics: Pressure Mounts Across the Board

Consumers are feeling the squeeze from all sides—and adjusting their financial behavior accordingly:

• Income Erosion: 39% of households report a decline in income, nearly double the number from summer 2024.
• Savings Strain: A quarter of consumers have reduced contributions to savings, while another 25% are dipping into existing savings to stay afloat.
• Spending Shift: Shoppers are tightening their belts, planning cuts across 15 of 17 tracked categories. Only groceries and automotive spending are expected to rise.

“Consumers are feeling the financial pressure from every angle, and it’s forcing a shift in behavior. From income declines to reduced savings and spending cuts across nearly every category, shoppers are tightening their belts and making tough decisions. Only essentials like groceries and automotive expenses are expected to rise—everything else is on the chopping block.” – Ken Kim, KPMG Senior Economist.

Consumers Get Tactical: Discounts, Thrift, and One-Trip Summers

Facing higher prices and tighter budgets, shoppers are responding with deliberate, value-first behavior:

• Discount Nation: Half of consumers say they’re actively reducing purchases; 49% are chasing discounts and promotions.
• Thrift Surge: Apparel spending at thrift stores is up 2% over last year, with women leading the charge.
• Dining Flip: Fast food visits are up 26%, while casual dining is down 38%—driven largely by cost-conscious households.

“The consumer mindset has fundamentally changed,” Rodrigo added. “This isn’t about buying less—it’s about buying smarter. Brands that deliver relevance, trust, and tangible value will win.”

Travel, But Make It Frugal

Consumers are cutting back — but not canceling summer. While overall spending is down, experiences like travel remain non-negotiable, even if it means trading restaurants, shopping, and second trips for one meaningful getaway.

Despite economic jitters, consumers aren’t canceling summer getaways:

• Summer Travel Plans: 58% plan to travel this summer (up slightly from 55% in 2024)
• Spending Adjustments: 7% less spend per trip, on average
• US Travel: Domestic preference dominates, with 62% staying stateside

“We’re seeing a more selective and cost-conscious summer travel season,” said Duleep Rodrigo, KPMG Consumer & Retail Leader. “Vacations are still in the budget—but nearly everything else is on the chopping block.”

Wellness is Non-Negotiable—But It’s Evolving

Consumers continue prioritizing wellness—even if it means cutting elsewhere:

• Fitness Focus: Physical fitness is a top priority for all age groups.
• Mental Health Prioritization: Mental health remains front-of-mind for Millennials and Gen Z, but lags with Boomers.
• Alcohol Reduction: 38% are drinking less alcohol, including about half of Gen Z and Millennials.
• GLP-1 Medications: 9% of consumers use GLP-1s today, 6% plan to start.

“Health and wellness look different across generations, but the momentum is undeniable. Younger consumers are focused on fitness, mental health, and stress management, while older generations are leaning into nutrition and preventative care. What unites them is a practical mindset—people want solutions that deliver real results, and they’re willing to change habits, cut back, and invest in what works.”
— Julia Wilson, KPMG Consumer and Retail Strategy Leader

Digital Behavior: Direct-to-Consumer and Data Tradeoffs

As consumers grow more selective, they’re also getting savvier about where they shop—and how their data is used:

• D2C Shopping: 27% now shop direct-to-consumer (D2C) for personal care, apparel, and food/beverages.
• D2C Priorities: Top D2C priorities: secure payment, easy returns, and fast/free shipping.
• Social Shopping: In-App is growing, especially for apparel, personal care, and groceries.
• Advertising skepticism: 56% say they’re not influenced by online ads; 44% say they are more likely to buy when they see ads.
• AI privacy tradeoffs:
  • 43% are uncomfortable with companies using generative AI to analyze personal data.
  • 34% are comfortable, and 23% are neutral.
  • Financial incentives and user control are key to easing privacy concerns.

“This is a pivotal moment,” said Sam Ganga, KPMG U.S. Consumer & Retail AI, Data & Cloud Leader. “AI isn’t just a backend tool—it’s becoming a brand experience. Consumers will reward companies that use it with transparency and purpose.”

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About the Survey
The KPMG Consumer Pulse Summer 2025 report is based on a nationally representative survey of 1,516 U.S. consumers across income brackets, geographies, and demographics. The study tracks sentiment, category spending, lifestyle priorities, and economic expectations on a quarterly basis.

About KPMG
KPMG LLP is the U.S. member firm of the KPMG global organization of independent member firms providing audit, tax and advisory services. The KPMG global organization operates in 142 countries and territories and has more than 275,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.
 
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