Consumers Draw New Spending Lines as Tariff Threats Loom
As seen in current events such as LVMH’s lackluster revenue picture announced Monday (April 14), which showed a decided pullback in luxury spending due to uncertainty in the economy, consumer spending patterns are changing. But know this: When the economy seems uncertain, consumers still get their nails done.
It’s a small but telling detail. Only 5.1% of all adult American consumers who routinely get a professional manicure or pedicure would forgo the pampering if those services’ costs were to rise.
It’s one of the interesting facts from the PYMNTS Intelligence’s forthcoming installment in its “New Reality Check: The Paycheck-to-Paycheck Report” series. It shows inflation-conscious consumers have already been keeping an eye on the price of everything from groceries and dining out to mobile phones and skating lessons over the past 12 months. Now, amid the prospect of tariffs potentially pushing price tags higher, many shoppers are taking a harder look at what their spending and budgeting might look like 12 months down the road.
The reappraisal has some surprising twists. The report publishing Thursday (April 17), “Navigating the Shifting Sands of Consumer Spending Amidst Rising Prices and New Tariffs,” based on a survey of more than 2,200 U.S. consumers in March 2025, dives into the categories of goods and services that people are ready to dig their heels in, and where shoppers would tap the brakes.
Among the notable findings: The sheer stickiness of certain categories of purchases, even when their prices creep up. Just like salon nail treatments, children’s extracurricular activities are nearly Teflon-resistant to steeper price tags. A mere 2.9% of parents said they would stop paying for soccer leagues, music lessons and the like if they became more expensive over the next 12 months.
The report’s data underscores that personal care products and services, along with children’s activities, show remarkable price resilience. Consumers are reluctant to cut back on small, personal indulgences and family-related expenses even if their wallets are feeling a bit thinner.
Tipping Points
But for other categories of discretionary purchases, there’s a critical tipping point: When their prices double, a significant chunk of consumers will simply walk away.
Almost 52 million consumers would abandon spending on some technology and digital devices — from laptops to Netflix subscriptions — along with certain groceries and dining out, household and lifestyle items (including cars, housecleaners, private school tuition, extracurricular activities and pet day care), and personal care products and services once the price goes up by 10%. Nearly 11 million more would draw the line if prices double.
But the personal care category would see the fewest number of consumers drop off under those two price increase scenarios, 8.2 million and 9.5 million, respectively. That suggests that while shoppers may say no to a new car or sofa, they’ll cling to small luxuries.
Even within essential categories like groceries, the report reveals a hierarchy of what’s considered indispensable. While most consumers would try to buy fewer or cheaper groceries and dine out less, only a small percentage would completely eliminate items in those categories. Just 3.4% would stop buying milk (dairy or plant-based). Restaurant dining, on the other hand, is viewed as more discretionary, with 14% willing to cut it out entirely after price increases.
The report also reveals how tariffs are playing a role. It shows that consumers who believe tariffs will negatively impact their finances are more likely to stop buying if prices increase compared to those who see tariffs in a positive light. This suggests that broader economic anxieties can amplify how sensitive consumers are to price changes.
Of course, just how financially secure a consumer is plays a pivotal role in their willingness to pay more. Shoppers with no money constraints are far more likely to maintain their buying habits when prices go up. Nearly 1 in 3 financially secure consumers said they’d continue buying as usual, while only 13% of paycheck-to-paycheck consumers struggling to pay their bills said the same. This “economic resilience gap” is a stark reminder of how differently rising prices impact various segments of the population.
There’s also a fascinating twist when it comes to retail memberships. Surprisingly, paycheck-to-paycheck consumers struggling with bills are less likely to abandon retail memberships than financially secure consumers when prices increase. This suggests that the perceived value of savings from places like Costco and Amazon Prime remains strong for those on tighter budgets, making these memberships a crucial economic tool.
Here are three key takeaways from this latest report:
• Personal care and children’s activities demonstrate strong price resilience, indicating their importance in consumer spending even during times of rising costs.
• When prices double, a substantial portion of consumers will cease purchasing, particularly in the household and lifestyle goods category.
• Financial security significantly impacts consumer price elasticity, with paycheck-to-paycheck consumers showing greater sensitivity to price increases compared to their financially secure counterparts.
It’s clear that the American consumer is carefully weighing their needs and wants in the face of economic uncertainty. Retailers who can understand these evolving priorities and price their goods accordingly will be best positioned to weather these shifting sands.
Read more:
Too Many Small Businesses Now Bet Tomorrow’s Survival on Today’s Sales
High-Income Earners Have a Secret: Uncertainty is Impacting Them Too
What Pinball Tells Us About Spending in the Post-Tariff World
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