Archive · 28 Jan 2026
American Consumer Sentiment Drops Amid Spending Surge
Even though many Americans are feeling unhappy about their jobs and the rising costs of things, they are still spending a lot of money.
This is surprising because usually, when people feel worried about money, they spend less.
But right now, even with this sadness, people are buying more stuff, especially around big shopping days like Black Friday and Cyber Monday.
Rich people are spending more because the stock market is doing well, and they own stocks.
Poor people are also spending, but not as much.
Some are buying cheaper things or treating themselves to small luxuries like perfume to feel better.
Experts think this spending will continue through the holidays, but they wonder how long it can last.
Consumer sentiment in the U.S. has dropped to near its lowest level since 2022, with Americans feeling pessimistic about jobs and inflation.
Despite this, retail spending in September was up 1% year on year, adjusted for inflation, showing a disconnect between sentiment and spending.
Wealthier Americans are driving sales growth, particularly in luxury goods, while lower-income consumers are spending less but still increasing their overall spending.
Some consumers are switching to budget-friendly retailers or indulging in small luxuries like perfume, known as the 'lipstick effect'.
Analysts predict that holiday sales will be 3.5-4% higher than last year, but they question how long the current spending trend can continue.
- Who
- American consumers
- What
- Consumer sentiment is low, but spending is up
- When
- Current trends observed in 2024, with data from September and Q3
- Where
- United States
- Why
- Despite feeling dejected about job prospects and inflation, Americans are continuing to spend, driven by various factors including stock market performance and small indulgences
- Consumer Sentiment Index
- Near June 2022 lows
- Retail Spending (September)
- Up 1% year on year (adjusted for inflation)
- LVMH Sales (Q3 2024)
- Up 3% compared to 2023
- Unilever Sales Growth
- Fueled by premium products
- Chipotle and Home Depot
- Noted drop in business from lower-income customers
- Spending Increase (Q3 2024)
- 4.3% for those earning over $100,000, 3.8% for those earning less than $60,000
- Mass-Market Fragrances Sales
- Up 17% year on year (January-September 2024)
- Predicted Holiday Sales Increase
- 3.5-4% higher than last year