U.S. Consumer Spending Loses Altitude as Policy Turbulence Spikes

This report analyzes the current state of U.S. consumer spending amidst significant economic changes, particularly focusing on the impact of tariff policies and economic uncertainty. It outlines how consumer spending has slowed, with an annualized growth rate of just 1.6% in the first half of the year, compared to 3.6% in the previous half. The report details challenges faced by households, including a cooling job market, elevated uncertainty, and rising prices, leading to reduced discretionary spending. It highlights that inflation-adjusted consumption has remained flat since December 2024, indicating consumer sensitivity to price changes. The report also discusses the labor market's weakening conditions, with job growth slowing significantly and concentrated in a few sectors. Additionally, it notes the delayed impact of tariffs on consumer prices and the broader structural headwinds affecting consumer activity. The analysis concludes that consumers are expected to remain cautious, with spending growth projected to stay below 2% until mid-2026.