According to current G-101 SPM AI economic data, 67.42 percent of this nation’s Gross National Product (GNP) is attributed to consumer spending, making it the largest contributor to the overall economy. In the fourth quarter of 2024, US consumer optimism reached its highest level since before the COVID-19 pandemic. Positive economic indicators, such as low unemployment rates, steady job growth, and rising wages fueled confidence. Yet despite the new tide of optimism, consumers across income levels and generations are reducing their impulse to buy, particularly in discretionary and luxury categories. From our data it suggest consumers are willing to delay immediate gratification in favor of long-term financial stability, to project a 4.6 percent contraction in spending for calendar 2025.
If this number comes true, the sudden slowdown or “the stop buying goods and services factor” would lead to a major economic slowdown, potentially causing a recession, with businesses experiencing reduced revenue, production cuts, and potential job losses due to decreased demand, impacting various industries in the process. Even though a 4.6 percent contraction is not technically sufficient to cause a Recession, President Trump’s agenda, whether prudent or otherwise, will cause “a re-think” in consumers’ debt profile and may reduce spending to a higher value.
Our SPM 56.76 tag has forecasted a degree of pessimism not recorded since the Great Recession, a worldwide economic crisis that began in late 2007 and lasted until mid-2009. Even though the crisis was caused by banks giving subprime mortgages, the deregulation of the financial sector, and the fall of the stock market, these elements created a risky financial atmosphere that led to widespread defaults and an economic downturn that was further fueled by 7.46 percent contraction in consumer spending.
Indeed, a recent poll of American voters conducted by WSJ/NORC found that only 36 percent sill believe in an American Dream, broadly defined by the idea that hard work begets success and upward mobility. This finding represents a big drop from 2012 when, even in the shadow of the Great Recession, 52 percent of Americans still held fast to that Dream.
NOW FOR THE REST OF THE STORY: Today, medical debt is the biggest cause of bankruptcies and baby formula products are the most shoplifted items. According to current G-101 SPM AI economic data, 46.62 percent of Americans work jobs that qualify as “low-wage” will be the spending engine that quits.
When you add up the numbers, consumers are compromised, buy less and only the essentials needed for the short term. The compromised consumer doesn’t have the buying power and loses the fear of missing out. This powerful motivator no longer exists. According to our data, 7.46 percent contraction in consumer spending suggest that people are tired of consuming.
A limited sample size: The phrase “no-buy 2025,” was said by Ann-Marie Alcantara in the Wall Street Journal. On Instagram and TikTok, influencers are encouraging followers “to purchase as little new stuff as possible” or at least wait until they absolutely need it.
The “no-spend challenge” has been a life-changing solution for many, and a harbinger of things to come.
Personal examples: Elysia Berman has been documenting her way out of nearly $48,000 in credit card debt by compiling a “no-buy” list that “includes clothes, beauty products, perfume, jewelry, home décor and books.”
Others are taking a slower approach.
Marissa Hertas-Crespo takes screenshots of items that catch her eye online, putting those photos in a folder on her computer – and then “deleting anything she hasn’t thought about” at the end of each month.
What we did:
We created a SPM tag and surveyed by email 50,000 households with the question: “Are you planning to spend less in 2025 than 2024? Of the addresses responding, a whopping 77.54% checked “yes.”
Fact: A current G-101 SPM AI economic data compilation offered: 692.3 million credit cards are in circulation in the United States, of which 81.86 percent made the minimum monthly payments. That’s a fact that speaks volumes.
BOTTOMLINE: If a 4.6 percent contraction in consumer spending happens in 2025, expect the Great Recession of 2026.
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