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U.S. consumer sentiment is slipping—and tariffs are high on the list of reasons why. A new survey from TransUnion shows a growing share of Americans feel uneasy about their financial future, with worries over trade policy, inflation, and recession weighing heavily on household budgets.
According to the data, 27% of consumers said they’re pessimistic about their finances over the next year. That’s up from 21% in late 2024 and the highest reading since early 2021, when pandemic uncertainty was still dominating the economy.
Tariff Fears Aren’t Just Background Noise Anymore
Tariffs have re-entered the conversation in a big way—and not just in boardrooms or policy circles. TransUnion found 87% of consumers are now concerned about tariffs. Forty-one percent said they’re “very concerned.”
It’s not just headline anxiety. Trade policy is once again influencing day-to-day spending, with people cutting back on travel, restaurants, and non-essential purchases. More than half of respondents said they’ve trimmed discretionary spending in the last three months.
That kind of belt-tightening is the consumer economy’s version of an amber warning light. Retailers are already feeling it. According to Business Insider, retail sales dropped 0.9% in May, while auto sales fell 3.5%—pulling back from the temporary bump caused by panic-buying earlier this year when tariff threats escalated.
Credit Uptick Points to Stress
One signal that deserves more attention: how people are managing liquidity. Thirty-seven percent of those most concerned about tariffs say they’re planning to apply for new credit—cards, personal loans, buy-now-pay-later options—compared to 30% of others.
This isn’t opportunistic borrowing. It’s pre-emptive. A hedge against what people think might be coming—whether that’s higher prices, slower wage growth, or job loss.
And while 23% said they’re boosting emergency savings, most households can only stretch their paychecks so far. Once credit starts filling the gap, the risk tolerance in the economy shifts. That’s when policy missteps—say, an overreaction to short-term inflation data—can do real damage.
Inflation and Recession Fears Are Reinforcing Each Other
The macro picture isn’t helping. Eighty-one percent of Americans say inflation is a top concern. That’s not new—but pair it with rising recession fears (52% now rank it among their biggest concerns) and you get a different dynamic. Consumers aren’t just reacting to prices; they’re anticipating a slowdown.
Plenty of them think it could hit by year-end. That’s not wild speculation either. Wage growth has cooled in some sectors. Hiring is down in others. And core costs—from food to insurance—aren’t easing fast enough to shift sentiment.
Younger Consumers Still Holding the Line
Interestingly, 55% of consumers still say they’re optimistic. That’s basically flat from last quarter, but down from 58% in late 2024. The real bright spot is generational. Gen Z (67%) and Millennials (64%) are still relatively upbeat.
That’s partly structural—many younger adults aren’t carrying mortgages, and they’ve benefited from a hot job market that rewarded flexibility and tech fluency. But it’s also psychological. Younger workers tend to view economic turbulence as a phase, not a fixed state.
A Fragile Balance
Here’s where things get tricky. The economy isn’t crashing. But consumer resilience is softening around the edges. Tariffs aren’t the only factor, but they’re a big one—because they inject unpredictability into prices at a time when Americans are already watching every dollar.
If these trade tensions escalate—especially with China or other major partners—the next few quarters could look very different. Tariffs aren’t just policy tools. They’re levers that move sentiment, shift supply chains, and compress margins. And right now, they’re pulling confidence in the wrong direction.
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