Research
April 09, 2025
Consumer outlook
Consumers are becoming more uneasy about the economy.
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.
Restaurant sales in 2025 will be dependent on the strength of the economy. If consumers have a job, they will likely spend money. Although the U.S. labor market is projected to continue expanding in the months ahead, job growth will likely be slower than was expected at the beginning of the year.
In addition to a slowing economy, consumer sentiment is being negatively impacted by uncertainties around tariffs, inflation and the stock market. The net result is that many households are becoming increasingly uneasy about their financial situation, which could lead to a pullback in spending.
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 is trending lower
The rising degree of economic uncertainty among households is reflected by the recent downturn in The Conference Board’s Consumer Confidence Index. This measure of consumer sentiment declined for the fourth consecutive month in March – settling at its lowest level since January 2021. The expectations component of the index, which measures consumers’ short-term outlook for income, business, and labor market conditions, fell to its lowest point in 12 years.
Labor market continues to expand
Although job growth was uneven in recent months, employers continued to expand payrolls at a moderate pace. The economy added an average of 152,000 jobs during the last 3 months, which is only slightly below the average monthly rate of job growth during 2024.
Wage growth is slowing
Although job growth remains positive, wage gains are down from their strong pandemic-era growth rates. Average hourly earnings of private sector employees increased 3.8% between March 2024 and March 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 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 fourth quarter of 2024, total household net worth had rebounded to reach a new record high of more than $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 February 2025, total revolving credit balances topped $1.3 trillion – nearly $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: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 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.
Restaurant sales in 2025 will be dependent on the strength of the economy. If consumers have a job, they will likely spend money. Although the U.S. labor market is projected to continue expanding in the months ahead, job growth will likely be slower than was expected at the beginning of the year.
In addition to a slowing economy, consumer sentiment is being negatively impacted by uncertainties around tariffs, inflation and the stock market. The net result is that many households are becoming increasingly uneasy about their financial situation, which could lead to a pullback in spending.
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 is trending lower
The rising degree of economic uncertainty among households is reflected by the recent downturn in The Conference Board’s Consumer Confidence Index. This measure of consumer sentiment declined for the fourth consecutive month in March – settling at its lowest level since January 2021. The expectations component of the index, which measures consumers’ short-term outlook for income, business, and labor market conditions, fell to its lowest point in 12 years.
Labor market continues to expand
Although job growth was uneven in recent months, employers continued to expand payrolls at a moderate pace. The economy added an average of 152,000 jobs during the last 3 months, which is only slightly below the average monthly rate of job growth during 2024.
Wage growth is slowing
Although job growth remains positive, wage gains are down from their strong pandemic-era growth rates. Average hourly earnings of private sector employees increased 3.8% between March 2024 and March 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 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 fourth quarter of 2024, total household net worth had rebounded to reach a new record high of more than $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 February 2025, total revolving credit balances topped $1.3 trillion – nearly $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: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 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.