Struggling Consumers Amidst Escalating Economic Stress - Report by KPMG
In the summer of 2025, U.S. consumers are grappling with inflationary pressures, according to KPMG's Consumer Pulse report. A staggering 94% of consumers are feeling the pinch, with 76% reporting a rise in living costs exceeding 5%.
Amid this economic uncertainty, consumers are prioritizing spending on essentials while showing caution on big-ticket discretionary items. Holidays and day trips top the list of summer spending priorities, reflecting a desire for experience-led spending. About 30% plan to spend on holidays, while everyday upgrades like minor home improvements and personal tech see moderate spending. However, many remain cautious about major purchases.
The report reveals that 50% of shoppers are cutting back on their spending, and 43% of consumers are uncomfortable with companies using AI to analyze their personal data. On the other hand, 34% of consumers are okay with this practice.
Consumer sentiment remains mixed. While 50% report being able to spend freely, a significant portion continues to cut discretionary costs or incur debt to cover essentials. Spending growth was noticed in discretionary categories like non-grocery retail, entertainment, leisure, and travel in Q2 2025, with a 6% year-over-year increase, outpacing inflation.
Consumers are also moving towards direct-to-consumer (D2C) channels for basics like clothing, food, and personal care. They expect secure payments, fast shipping, and hassle-free returns from these channels.
Consumers are buying with purpose, prioritizing relevance, trust, and tangible value in their decisions. Trust and transparency are crucial for consumers in their interactions with technology.
In terms of health, 9% of consumers are currently using GLP-1 medications for weight loss or health, and 6% are planning to start.
The report also highlights the impact of tariffs on consumer spending. Over 70% of surveyed consumers expect a recession within the next year, and many blame tariffs for rising prices on food, clothing, electronics, and cars. Fast food visits have increased by 26%, while casual dining visits have decreased by 38%. Thrift store apparel spending has increased by 2%.
Brands that respond with empathy, clarity, and real utility are the ones most likely to survive the shift. Consumers are chasing discounts and promotions, with 49% of shoppers actively seeking them out.
Lastly, 38% of consumers are drinking less alcohol, suggesting a shift towards more mindful consumption habits.
[1] KPMG's Consumer Pulse report for summer 2025 [2] [5] Data from the report [3] [4] Additional insights from the report [6] [7] Additional findings from the report [8] [9] Other relevant data points from the report
- As the summer of 2025 unfolds, consumers are showing a keen interest in experience-led spending, with holidays and day trips being top priorities, according to KPMG's Consumer Pulse report [1].
- In the realm of health-and-wellness, 9% of consumers are already using GLP-1 medications for weight loss or health, and 6% are planning to start, as highlighted in KPMG's report [2].
- Amidst the economic uncertainty, personal-finance matters are at the forefront. The report reveals that 43% of consumers are uncomfortable with companies using AI to analyze their personal data, while 34% find it acceptable [4].
