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Economy

Alex Vuocolo

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 at a steady clip, and the latest from Deloitte predicts retail sales will increase between 2.9% and 3.4%, down from 4.2% growth in 2024.

The research firm is expecting disposable personal income (DPI) to drive sales, growing 3.1% and 5.4% over the holiday period and offsetting some of the economic uncertainty facing consumers.

“Steady growth in income can help offset some economic uncertainty, including any labor market weakness and the burden of high credit card and student debt on consumer spending,” Akrur Barua, economist at Deloitte Insights, said in a statement.

He also acknowledged that while inflation will likely weigh on volumes, it will be a tailwind for the overall dollar value of retail sales—which Deloitte expects to total $1.61–$1.62 trillion in holiday spending from November to January.

E-commerce sales are also on track to give holiday spending a boost, with the category set to grow between 7% and 9% year over year, per the report.

“Our forecast anticipates that e-commerce sales will stay strong as consumers keep leveraging online deals to stretch their spending power,” Natalie Martini, vice chair at Deloitte and US retail and consumer products leader, said.

 average holiday spending to decline 5% in the “the first notable drop since 2020.” That report found that a pullback from Gen Z may be one of the main drivers of the decline.

Disposable income growth could offset economic uncertainty this holiday

A new holiday forecast predicts 2.9% to 3.4% growth this holiday season, with disposable income driving the increase.

Disposable income growth could offset economic uncertainty this holiday: Deloitte

Holiday spending is set to decline 5% from 2024 in “the first notable drop since 2020,” according to a new study from PricewaterhouseCoopers.

The outlook predicts a more chaotic holiday season in general, as rising prices and a higher cost of living disrupt the usual patterns.

“Holiday shopping typically plays out like a well-rehearsed melody — steady rhythms, familiar refrains,” the accounting firm wrote. “But this year, it feels more like jazz: improvisational and less predictable, with shifting consumer behavior, smarter spending and a younger generation leading the key change.”

The report found that Gen Z shoppers will be the biggest contributors to the decline, reducing their holiday budgets by 23%, while millennials, baby boomers, and Gen X plan to maintain or increase their spending this year.

PwC said the key takeaway for retailers is “look beyond price cuts—and to understand how life stage, values, and emotions drive spending.”

There’s one big qualification for this outlook, however. As PwC notes, the survey reflects consumer sentiment in June, when there was “more uncertainty around tariffs, which have since been delayed or paused.”

And yet the latest data shows things haven’t necessarily improved since June. The University of Michigan’s widely cited index on consumer sentiment was down 5.7% month over month and 14.3% year over year in August—though this still marks an improvement from April and May, when tariff fears were even more pronounced.

For consumers who are concerned about tariffs, their fears could translate into lower spending, as they expect to spend 10% less this year. Indeed, 90% of “tariff-concerned shoppers” plan to cut back overall, compared to 75% of everyone else.

Looking at the bigger picture, the survey found that 84% of consumers plan to pull back on spending over the next six months, on everything from dining out to big-ticket items.

Gen Z could fuel steepest drop in holiday spending since 2020

Younger shoppers are set to pull back in the face of rising prices and a higher cost of living, according to a new study from PwC.

Gen Z could fuel steepest drop in holiday spending since 2020: study

If a new survey from Deloitte proves correct, don’t expect a blowout back-to-school shopping season this year.

The survey estimates consumers will spend $570 per student, down $16 from last year and 7% from 2021. Total spending is expected to hit $30.9 billion, roughly flat year over year, as parents prioritize essentials, trade down where possible, and spread out their purchases.

“Parents are laser-focused on preparing their children for the school year, but we expect back-to-school spending to remain flat amid economic headwinds and financial concerns across income groups,” Natalie Martini, US retail and consumer products sector leader for Deloitte, said in a statement.

However, not every income group is pulling back equally. Middle and higher-income parents are planning to spend 7% and 9% less respectively, while lower-income parents plan to spend 10% more.

There is one bright spot, however, fueled by parents who appear determined to help their child make a good first-day impression. Apparel spending is predicted to rise 6%, with more than half of parents saying they were willing to spend extra on their child’s first-day outfit.

In the meantime, every other major category is predicted to decline, per Deloitte, including technology (-8%), school supplies (-3%) and health and home products (-12%).

This trend may be due to parents embracing more value-seeking behavior, such as waiting longer for lower-cost or no-cost deliveries, shifting to cheaper brands, using cash-back websites, and buying in bulk.

“Value for the money is the top driver of retailer choice, and parents are increasingly willing to switch brands or retailers to find the best deals,” Brian McCarthy, principal of retail strategy at Deloitte, said.

Higher-income parents plan to pull back on back-to-school spending

In meantime, lower-income parents plan to spend 10% more, even as many consumers prioritize essentials and search for deals. 

Are tariffs making you nervous about spending big this Mother’s Day? You’re not alone.

 from LendingTree found that more than a third of Americans (38%) blamed tariffs for pulling back on their spending this year (though we wouldn’t advise using this excuse on your mom come Sunday, unless she’s up to speed on all the latest macroeconomic threats).

But with just a few days left until the big day, there are still some mixed signals about whether consumers are going to shell out for their mother figures this year or pull back in the face of economic uncertainty and tariffs.

LendingTree’s survey at least is on the bearish side. The online banking service found that Americans plan to spend an average of $148 on Mother’s Day this year, down 14% from $172 last year and down 34% from $225 in 2022.

This isn’t for lack of trying though, as 50% say they might spend more than they can afford.

“Hardly anyone wants to get their mom less of a Mother’s Day gift than they have in the past, but in a time of rising prices and great financial uncertainty, difficult decisions need to be made,” Matt Schulz, LendingTree chief consumer finance analyst, said in a statement. “Unfortunately, this survey hints at the fact that for many families, one of those sacrifices involves spending less on Mom this Mother’s Day.”

Looking at the bigger picture, the National Retail Federation is more bullish. The trade group’s 

 found that consumers plan to spend a total of $34.1 billion this year, up slightly from last year’s $33.5 billion, and $259.04 on average for those celebrating, up $5 from last year.

As NRF VP of Industry and Consumer Insights Katherine Cullen put it, Mother’s Day is 

 by the winter holidays in terms of spending, and economic uncertainty is not going to stop that.

Adobe Analytics is also seeing positive signs in its real-time online sales data. Sales were up 59% on fragrances; 21% on purses and handbags; 19% for lipstick; and 500%–550% on flowers, with higher increases on luxury categories across the board. Some specific bestsellers include crossbody bags, clutches, purple-toned lipstick, and charm bracelets.

Tariffs could put a damper on Mother’s Day spending

With just a few days left, there is still some disagreement about how the holiday will turn out spending-wise. 

Tariffs could put a damper on Mother’s Day spending, but some are still predicting consumers to shell out 

Erin Cabrey

Retail sales rose 1.4% to $734.9 billion in March and 4.6% year over year, the Commerce Department reported today. The sales bump follows the underwhelming 0.2% rise in 

, and could indicate consumers are stocking up on products before their price tags are boosted by tariffs.

Last week, the Consumer Price Index, reported by the Bureau of Labor Statistics, showed inflation dropped 2.4% annually and 0.1% month over month—the first monthly dip since May 2020, and the potential 

 before the storm of President Trump’s sweeping tariffs.

 of new and used vehicles in the US to quickly decline. Retail trade sales—which excludes motor vehicles, parts, and gas stations—were up 0.8% from February.

Food and beverage store sales notched up 0.2%, with a 0.1% increase for grocery stores, while sales at health and personal care stores rose 0.7%. Categories that also saw sales bumps include clothing and accessories stores (0.4%), miscellaneous store retailers (0.7%), and general merchandise stores (0.6%—though department store sales dropped 0.3%).

Nonstore retailers, composed largely of online sales, grew sales by just 0.1% after 2.4% growth in February. Furniture and home furnishing stores saw sales decline 0.7%.

Even as sales rose last month, the back and forth of President Trump’s tariffs, 

 for another 90 days last week, with the exception of China, is impacting consumers, National Retail Federation Chief Economist Jack Kleinhenz said in a statement.

“There is no question that the consumer is not feeling great given the confusion of policy announcements from Washington,” he said. “On-again, off-again rising tariffs and resulting turmoil in the stock market and world economy are clearly impacting consumer concerns about higher prices and future consumer spending growth.”

That appears to be reflected in the latest consumer sentiment index The University of Michigan released last Friday, which revealed an 11% slip to 50.8, marking four straight months of 

. Consumers’ inflation expectations jumped to the highest they’ve been since 1981, as they’re anticipating a 6.7% jump in prices in the year ahead.

Retail sales ticked up 1.4% in March

As sales rose, so did consumers’ fears around inflated prices this year. 

Retail sales ticked up 1.4% in March as consumers shop ahead of tariffs

Coca-Cola on Tuesday said it was taking steps to mitigate and hedge against the impact of tariffs, noting that much of its supply chain is already localized.

“We are predominantly a local business when it comes to making each of the beverages,” CEO James Quincey told analysts. “The vast majority of everything that’s consumed in the US is made in the US.”

He added: “While it is a global business, it’s very local. So yes, every bottler will be importing something from somewhere as a piece of the puzzle, but the economics are more predominantly local than they are global. It is a piece of the puzzle we need to manage through.”

 have also expressed confidence that they will be able to weather trade disruptions, though not without making some adjustments.

To the extent that tariffs do become a challenge, Coca-Cola has a two-part strategy, Quincey explained: First, it has “hedging programs in place that look to assure supply and price going out.” Second, it will look at mitigation efforts, which could include efficiency investments and adjustments to sourcing.

As tariffs loom and market volatility rises, 60% of companies are overhauling their supply chains, per a report from operations platform RELEX based on 579 retail, consumer packaged goods (CPG), and wholesale professionals across multiple countries.

The study found that the majority of companies are investing in diversification, automation, and supply chain resilience in response to more complex trade relations globally.

52% cited demand volatility as their biggest challenge.

47% singled out tariffs as a growing threat.

And 62% are addressing these issues with “efficiency improvements and price adjustments.”

“Supply chains are in a pressure cooker—between tariffs, demand shifts, and unpredictable disruptions, the outdated and traditional way of operating isn’t sustainable,” Dr. Madhav Durbha, group VP of CPG and manufacturing at RELEX Solutions, said in a statement. “Companies that lean into AI, automation, and supplier diversification will not only weather this volatility but emerge stronger. The ones that don’t risk falling behind.”

Coca-Cola plans to ‘manage through’ tariffs 

As a majority of firms overhaul their supply chains, Coca-Cola says it’s prepared to manage trade disruptions.

Coca-Cola calls itself a ‘local business,’ plans to ‘manage through’ tariffs 

Tyson Foods President and CEO Donnie King assured analysts on Monday that the meat-processing company is prepared to find new markets if Mexico curbs US imports in response to President Trump’s proposed tariffs.

“Essentially what we would do, whether it be pork or whether it would be chicken, is find other markets,” King said. “We would leverage our global knowledge and expertise to try to move those products if necessary.”

Mexico is a large trading partner for Tyson, he said, but the company is nonetheless confident it can adapt: It has been developing contingency plans around finding new markets for pork and certain chicken parts, such as leg quarters, which make up its imports to Mexico.

“Our teams continuously engage in contingency planning to minimize business disruption from trade or supply chain changes,” King said. “As we’ve done in the past, we’ll leverage our global expertise to identify the best markets for our products amid evolving conditions.”

As of Monday, Tyson will have a little more time to come up with a plan. Mexican President Claudia Sheinbaum and the Trump administration have 

 to delay tariffs for a month, on the condition that Sheinbaum deploy 10,000 troops to the border with the goal of curbing immigration and the flow of illegal drugs.

Despite the economic uncertainty, King said Tyson is raising its sales guidance for the year as it expects a healthy demand for protein to drive volume.

“We remain confident in our ability to adapt and succeed,” he added. “We look forward to working with the new administration in Congress to support the US economy and we’ll continue to monitor and respond to new policies accordingly.”

However, even if tariffs were imposed tomorrow, it would take time for the impact to reach US business, according to Hamish Woodrow, head of strategic analytics at supply chain platform Motive. He said the immediate impact of tariffs will be “muted,” as many goods are already en route, “meaning the real disruption will be felt in Q2 as businesses adjust to the new reality.”

Companies will also deploy mitigation strategies, he added, such as delaying shipments until later in the year in case policies are changed or exemptions are offered.

“Those who preloaded inventory will likely adopt a wait-and-see approach, holding off on further adjustments until the market reacts,” he wrote. “In the short term, sourcing alternatives are limited, forcing supply chains to pause and reassess long-term investments while monitoring policy developments.”