Research
June 18, 2025
Consumer outlook
Consumer sentiment remains fragile despite a growing economy
Consumers have consistently been the catalyst that powered the post-pandemic economic recovery in the U.S. Whenever calls for a recession emerged during the last few years, households responded by maintaining – or even ramping up – their spending levels.
As such, the economy remained resilient and the labor market continued to expand. Job growth is the top driver of restaurant sales, as employed consumers are more likely to spend money on discretionary things like restaurant experiences.
While the economy continued to add jobs during the first half of 2025, consumer sentiment began to deteriorate. That was due largely to uncertainties around tariffs, inflation and the stock market.
Although many households reported a growing unease about their financial situation, it didn’t translate to a notable pullback in spending until May. However, one month is not a trend, and it remains to be seen if that was a temporary blip or the beginning of a retrenchment.
Looking ahead to the second half of 2025, restaurant sales will remain dependent on the strength of the economy. If consumers have a job, they will likely look past the economic uncertainties and continue to spend money.
This article presents the latest trends in key indicators that impact consumers’ ability and willingness to spend. Visit this page throughout the year for ongoing analysis of the state of the American consumer.
Consumer confidence remains dampened despite an uptick in May
The recent economic uncertainty among households was reflected by a sharp downturn in The Conference Board’s Consumer Confidence Index. This measure of consumer sentiment declined in five consecutive months (December 2024 to April 2025) – settling at its lowest level since April 2020. The expectations component of the index, which measures consumers’ short-term outlook for income, business, and labor market conditions, plunged to its lowest level in nearly 14 years. Although consumer confidence rebounded somewhat in May, the index remains well below its readings at the beginning of the year.
Labor market continues to expand
Although job growth decelerated in recent months, employers continued to expand payrolls at a moderate pace. The economy added an average of 124,000 jobs during the first 5 months of 2025, which is down from the average monthly pace of job growth during 2024 (168,000).
Wage growth is slowing but remains above historical averages
Although job growth remains positive, wage gains are down from their strong pandemic-era growth rates. Average hourly earnings of private sector employees increased 3.9% between May 2024 and May 2025. That was 2 percentage points below the strong gains posted during 2022, but still remained above the 3.3% average gain during 2019.
Savings rate dipped below pre-pandemic levels
Household savings soared during the first year and a half of the pandemic, driven primarily by reduced consumer activity as well as income-supporting fiscal stimulus packages. Many households used these excess savings to support elevated spending levels, which blunted the impact of soaring inflation. Savings rates are now below pre-pandemic levels, which means the financial cushion that many households established during the pandemic is largely depleted.
Household wealth declined in the first quarter
Household wealth rose to record highs during the pandemic, driven by a surging stock market and accelerating home values. These two indicators reversed trend in 2022, which resulted in a decline in total household net worth. By the fourth quarter of 2024, total household net worth had rebounded to reach a new record high of nearly $171 trillion. However, the first quarter of 2025 saw a 0.9% drop (or $1.6 trillion) in household wealth, due largely to declines in the stock market.
Household debt continues to rise
Household debt trended steadily higher in recent years, with aggregate balances topping $18 trillion by 2025:Q1. That was $4.1 trillion higher than the 2019:Q4 level. Mortgages represent the bulk of household debt at 70%, followed by auto loans (9%) and student loans (9%).
Revolving credit levels continue to rise
Consumer credit balances fell to a 4-year low during the early months of the pandemic – primarily because households had fewer places to spend their money. That trend quickly reversed as restrictions eased and the economy reopened. Revolving consumer credit rose sharply during the last 4 years, which easily wiped out all of the balance reductions posted during the early months of the pandemic. By April 2025, total revolving credit balances topped $1.3 trillion, which was $269 billion (or nearly 26%) above their pre-pandemic peak.
Debt service remains in check
Despite the elevated debt levels, debt service remains manageable for households on the aggregate. The Federal Reserve’s Debt Service Ratio, which is the ratio of total required household debt payments to total disposable income, was just over 11% in 2024:Q4. While that was higher than the lows posted during the first half of 2021, it was slightly below pre-pandemic readings.
Overall delinquency rates are trending higher
While debt service levels remained manageable in historical terms, overall delinquency rates trended higher in recent quarters. As of 2025:Q1, 4.3% of outstanding household debt was in some stage of delinquency. That was up nearly 2 full percentage points from the recent low of 2.5% in 2022:Q4, and was approaching the 2019 average of 4.6%.
Credit card delinquencies are rising sharply
Along with an uptick in overall delinquency rates, the percentage of credit cards that were severely delinquent rose dramatically in recent quarters. As of 2025:Q1, 12.3% of credit card debt was at least 90 days delinquent. That was up from a recent low of 7.6% in 2022:Q3 and represented the highest level in 14 years.
As such, the economy remained resilient and the labor market continued to expand. Job growth is the top driver of restaurant sales, as employed consumers are more likely to spend money on discretionary things like restaurant experiences.
While the economy continued to add jobs during the first half of 2025, consumer sentiment began to deteriorate. That was due largely to uncertainties around tariffs, inflation and the stock market.
Although many households reported a growing unease about their financial situation, it didn’t translate to a notable pullback in spending until May. However, one month is not a trend, and it remains to be seen if that was a temporary blip or the beginning of a retrenchment.
Looking ahead to the second half of 2025, restaurant sales will remain dependent on the strength of the economy. If consumers have a job, they will likely look past the economic uncertainties and continue to spend money.
This article presents the latest trends in key indicators that impact consumers’ ability and willingness to spend. Visit this page throughout the year for ongoing analysis of the state of the American consumer.
Consumer confidence remains dampened despite an uptick in May
The recent economic uncertainty among households was reflected by a sharp downturn in The Conference Board’s Consumer Confidence Index. This measure of consumer sentiment declined in five consecutive months (December 2024 to April 2025) – settling at its lowest level since April 2020. The expectations component of the index, which measures consumers’ short-term outlook for income, business, and labor market conditions, plunged to its lowest level in nearly 14 years. Although consumer confidence rebounded somewhat in May, the index remains well below its readings at the beginning of the year.
Labor market continues to expand
Although job growth decelerated in recent months, employers continued to expand payrolls at a moderate pace. The economy added an average of 124,000 jobs during the first 5 months of 2025, which is down from the average monthly pace of job growth during 2024 (168,000).
Wage growth is slowing but remains above historical averages
Although job growth remains positive, wage gains are down from their strong pandemic-era growth rates. Average hourly earnings of private sector employees increased 3.9% between May 2024 and May 2025. That was 2 percentage points below the strong gains posted during 2022, but still remained above the 3.3% average gain during 2019.
Savings rate dipped below pre-pandemic levels
Household savings soared during the first year and a half of the pandemic, driven primarily by reduced consumer activity as well as income-supporting fiscal stimulus packages. Many households used these excess savings to support elevated spending levels, which blunted the impact of soaring inflation. Savings rates are now below pre-pandemic levels, which means the financial cushion that many households established during the pandemic is largely depleted.
Household wealth declined in the first quarter
Household wealth rose to record highs during the pandemic, driven by a surging stock market and accelerating home values. These two indicators reversed trend in 2022, which resulted in a decline in total household net worth. By the fourth quarter of 2024, total household net worth had rebounded to reach a new record high of nearly $171 trillion. However, the first quarter of 2025 saw a 0.9% drop (or $1.6 trillion) in household wealth, due largely to declines in the stock market.
Household debt continues to rise
Household debt trended steadily higher in recent years, with aggregate balances topping $18 trillion by 2025:Q1. That was $4.1 trillion higher than the 2019:Q4 level. Mortgages represent the bulk of household debt at 70%, followed by auto loans (9%) and student loans (9%).
Revolving credit levels continue to rise
Consumer credit balances fell to a 4-year low during the early months of the pandemic – primarily because households had fewer places to spend their money. That trend quickly reversed as restrictions eased and the economy reopened. Revolving consumer credit rose sharply during the last 4 years, which easily wiped out all of the balance reductions posted during the early months of the pandemic. By April 2025, total revolving credit balances topped $1.3 trillion, which was $269 billion (or nearly 26%) above their pre-pandemic peak.
Debt service remains in check
Despite the elevated debt levels, debt service remains manageable for households on the aggregate. The Federal Reserve’s Debt Service Ratio, which is the ratio of total required household debt payments to total disposable income, was just over 11% in 2024:Q4. While that was higher than the lows posted during the first half of 2021, it was slightly below pre-pandemic readings.
Overall delinquency rates are trending higher
While debt service levels remained manageable in historical terms, overall delinquency rates trended higher in recent quarters. As of 2025:Q1, 4.3% of outstanding household debt was in some stage of delinquency. That was up nearly 2 full percentage points from the recent low of 2.5% in 2022:Q4, and was approaching the 2019 average of 4.6%.
Credit card delinquencies are rising sharply
Along with an uptick in overall delinquency rates, the percentage of credit cards that were severely delinquent rose dramatically in recent quarters. As of 2025:Q1, 12.3% of credit card debt was at least 90 days delinquent. That was up from a recent low of 7.6% in 2022:Q3 and represented the highest level in 14 years.