US consumers' view of the economy has fallen to its most negative level since 1997.
According to Deloitte's annual survey, as the busy shopping season approaches, most American consumers have a pessimistic view of the economy. The survey of nearly 4,000 respondents found that 57% of respondents expect the economy to weaken next year. That compares with 30% the previous year who expected the economy to be weaker before the holidays and 54% in 2008, one of the years of the Great Recession. The figure marks the most negative economic outlook since Deloitte began tracking in 1997. According to Deloitte, 77% of survey participants said they expect higher prices for holiday items. This rate was 69% last year. This is the first holiday since President Donald Trump's latest wave of tariff increases on many imported goods. “We've been talking about a resilient consumer for a while now,” said Brian McCarthy, retail strategy leader at Deloitte. “Despite all this pressure, the American consumer continues to spend and we continue to see growth and retail spending. This outlook is starting to show we're nearing the end of that resilience.” Consumers' pessimism has affected their spending plans during the holidays. According to a survey by Deloitte, they plan to spend an average of $1,595 to prepare for higher prices. That's 10% less than the $1,778 they planned to spend the previous year. Deloitte found that lower levels of expected spending occurred across all household income groups and across nearly all generations. But it's especially important for younger shoppers. In the survey, Gen Z consumers, ages 18 to 28, said they planned to spend an average of 34% less this holiday season than a year ago. Millennials ages 29 to 44 in the survey said they expected to spend an average of 13% less this holiday season. This compares to Generation X, who plan to spend an average of 3% more, and Baby Boomers, who expect to spend an average of 6% less.
