Research
February 13, 2025
Consumer outlook
Consumers are expected to remain resilient in 2025, despite some recent softening in the labor market.
A healthy and expanding labor market is a key driver of restaurant sales, as it gives households the financial wherewithal boost spending. High rates of employment also increase consumers’ need for the convenience that the industry provides on a daily basis.
The second half of 2024 saw moderating growth in both employment and wages, which are two key catalysts for household spending. At the same time, equity and home values remained at or near record highs, which pushed household wealth to new peaks and supported spending growth. However, inflation has chipped away at purchasing power, forcing many households to tap into savings or make difficult trade-offs with their limited resources.
Restaurant sales in 2025 will continue to be driven by the strength of the economy. If consumers have a job, they will spend money. Based on the expectations of continued job growth, households on the aggregate will remain in a positive financial position.
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.
Labor market remains healthy
Although job growth was uneven in recent months, employers continued to expand payrolls at a moderate pace. The economy added an average of 237,000 jobs during the last 3 months, which represented the strongest 3-month moving average in nearly 2 years.
Wage growth is slowing
Although job growth remains solid, wage gains are down from their strong pandemic-era growth rates. Average hourly earnings of private sector employees increased 4.1% between January 2024 and January 2025. That was nearly 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 at a record high
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 third quarter of 2024, total household net worth had rebounded to reach a new record high of nearly $169 trillion. While household wealth doesn’t directly determine the amount that most consumers can spend on a daily basis, its impact on confidence influences current and future financial decisions.
Household debt continues to rise
Household debt trended steadily higher in recent years, with aggregate balances topping $18 trillion by 2024:Q4. That was $3.9 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 rising sharply
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 December 2024, total revolving credit balances reached nearly $1.4 trillion – more than $260 billion (or 24%) 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:Q3. 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 low, but rising
With debt service at manageable levels, overall delinquency rates remain in check – despite trending higher in recent quarters. As of 2024:Q4, 3.6% of outstanding household debt was in some stage of delinquency. While this was up more than a full percentage point from the recent low of 2.5% in 2022:Q4, it remained well below the 2019 average of 4.6%.
Credit card delinquencies rising sharply
Overall delinquency rates remain low, but the percent of credit cards that were severely delinquent rose sharply in recent quarters. As of 2024:Q4, 11.4% 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 13 years.
Pent-up demand remains firm
Based on the National Restaurant Association’s measures of pent-up demand, consumers will likely continue to visit restaurants in the coming months – as long as they have the financial wherewithal to do so.
Forty-eight percent of adults say they are not going out to restaurants as often as they would like, according to a survey fielded January 10-12, 2025. That was up from 42% of consumers who reported similarly in September 2024.
Meanwhile, 37% of adults say they are not ordering takeout or delivery from restaurants as often as they would like. That was on par with recent surveys.
Members of Generation X are the most likely to say they aren’t using restaurants enough. Fifty-eight percent of Gen Xers say they are not eating on premises at restaurants as often as they would like. Only 4 in 10 Gen Z adults reported similarly.
Gen Xers are also the most likely to say they are not ordering takeout or delivery from restaurants as often as they would like.
Pent-up demand is higher among lower-income households, with a majority of consumers in households with income below $50,000 saying they would like to go out to restaurants more frequently. Nearly half report similarly about ordering takeout and delivery.
Meanwhile, 36% of adults living in households with income above $100,000 say they are not going out to restaurants as often as they would like.
Any amount of unfulfilled demand among higher-income households is an important indicator for restaurants, as this demographic group represents the majority of spending in the industry.
According to data from the Bureau of Labor Statistics, households with incomes of $200,000 or higher are responsible for 24% of the total spending on food away from home, while households with incomes between $100,000 and $199,999 account for 35% of industry spending.
Taken together, households with income above $100,000 are responsible for nearly 6 in 10 dollars spent in restaurants.
The second half of 2024 saw moderating growth in both employment and wages, which are two key catalysts for household spending. At the same time, equity and home values remained at or near record highs, which pushed household wealth to new peaks and supported spending growth. However, inflation has chipped away at purchasing power, forcing many households to tap into savings or make difficult trade-offs with their limited resources.
Restaurant sales in 2025 will continue to be driven by the strength of the economy. If consumers have a job, they will spend money. Based on the expectations of continued job growth, households on the aggregate will remain in a positive financial position.
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.
Labor market remains healthy
Although job growth was uneven in recent months, employers continued to expand payrolls at a moderate pace. The economy added an average of 237,000 jobs during the last 3 months, which represented the strongest 3-month moving average in nearly 2 years.
Wage growth is slowing
Although job growth remains solid, wage gains are down from their strong pandemic-era growth rates. Average hourly earnings of private sector employees increased 4.1% between January 2024 and January 2025. That was nearly 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 at a record high
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 third quarter of 2024, total household net worth had rebounded to reach a new record high of nearly $169 trillion. While household wealth doesn’t directly determine the amount that most consumers can spend on a daily basis, its impact on confidence influences current and future financial decisions.
Household debt continues to rise
Household debt trended steadily higher in recent years, with aggregate balances topping $18 trillion by 2024:Q4. That was $3.9 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 rising sharply
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 December 2024, total revolving credit balances reached nearly $1.4 trillion – more than $260 billion (or 24%) 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:Q3. 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 low, but rising
With debt service at manageable levels, overall delinquency rates remain in check – despite trending higher in recent quarters. As of 2024:Q4, 3.6% of outstanding household debt was in some stage of delinquency. While this was up more than a full percentage point from the recent low of 2.5% in 2022:Q4, it remained well below the 2019 average of 4.6%.
Credit card delinquencies rising sharply
Overall delinquency rates remain low, but the percent of credit cards that were severely delinquent rose sharply in recent quarters. As of 2024:Q4, 11.4% 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 13 years.
Pent-up demand remains firm
Based on the National Restaurant Association’s measures of pent-up demand, consumers will likely continue to visit restaurants in the coming months – as long as they have the financial wherewithal to do so.
Forty-eight percent of adults say they are not going out to restaurants as often as they would like, according to a survey fielded January 10-12, 2025. That was up from 42% of consumers who reported similarly in September 2024.
Meanwhile, 37% of adults say they are not ordering takeout or delivery from restaurants as often as they would like. That was on par with recent surveys.
Members of Generation X are the most likely to say they aren’t using restaurants enough. Fifty-eight percent of Gen Xers say they are not eating on premises at restaurants as often as they would like. Only 4 in 10 Gen Z adults reported similarly.
Gen Xers are also the most likely to say they are not ordering takeout or delivery from restaurants as often as they would like.
Pent-up demand is higher among lower-income households, with a majority of consumers in households with income below $50,000 saying they would like to go out to restaurants more frequently. Nearly half report similarly about ordering takeout and delivery.
Meanwhile, 36% of adults living in households with income above $100,000 say they are not going out to restaurants as often as they would like.
Any amount of unfulfilled demand among higher-income households is an important indicator for restaurants, as this demographic group represents the majority of spending in the industry.
According to data from the Bureau of Labor Statistics, households with incomes of $200,000 or higher are responsible for 24% of the total spending on food away from home, while households with incomes between $100,000 and $199,999 account for 35% of industry spending.
Taken together, households with income above $100,000 are responsible for nearly 6 in 10 dollars spent in restaurants.