Americans Suddenly Cut Back Spending

Americans across all age groups have dramatically cut back on spending between April and June, a recent study from TransUnion found, as many remain concerned about the higher cost of living despite declining inflation.

While inflation declined to a 3.3 percent annual rate in May, down from 3.4 percent in April, 63 percent of respondents to TransUnion's latest quarterly survey said they were extremely or very concerned about the current rate of inflation. For half of respondents, the rise in the cost of living was their primary concern, while 84 percent considered it among their top three worries.

The survey—which measures shifting consumer attitudes and behaviors in the U.S.—found that 39 percent of all respondents said they had cut back on discretionary spending in the past three months. That means they are spending less on fun activities, such as traveling, eating out and entertainment.

People shop at a grocery store on June 10, 2022 in New York City. Spencer Platt/Getty Images

Among respondents who said they were concerned about inflation, the share went up to 58 percent.

Sixty-six percent of respondents said they were concerned about the rising price of gasoline; 40 percent were worried about takeout and meal delivery becoming more expensive; and 84 percent feared a rise in the cost of groceries. All the percentages were higher than they were in TransUnion's 2024 first quarter survey: 11 percentage points higher for gasoline, 7 percentage points higher for takeout and meal delivery, and 4 percentage points higher for groceries.

Newsweek contacted TransUnion for comment by email outside normal business hours.

Despite the U.S. economy having fared relatively well following the pandemic, especially when compared to other Western countries, the TransUnion survey showed what other recent polls have recently reported: Most Americans think the country's economy is heading in the wrong direction.

"Prices are coming down but that increase is still fresh in people's memories," John Van Reenen, the Ronald Coase chair in economics and school professor at the London School of Economics and a digital fellow at the Massachusetts Institute of Technology's Initiative on the Digital Economy, told Newsweek in May.

"Governments all over the world are being punished for that bad experience, and I think that's part of what's happening in the U.S.," he added. "It's ironic because, compared to other advanced countries, the U.S. is doing fantastically well in terms of growth."

While the strong U.S. labor market has kept the economy afloat, some Americans are experiencing financial hardship.

Forty-eight percent of respondents to the TransUnion survey said their household income hadn't kept up with the rate of inflation in the past three months. The older generations struggled the most, with 56 percent of Gen Xers and 53 percent of baby boomers saying their incomes hadn't kept pace with inflation, compared to 37 percent of Gen Zers and 40 percent of millennials.

A significant drop in Americans' spending could have a meaningful effect on the U.S. economy, potentially leading to a slowdown. Forty-eight percent of those concerned about inflation told TransUnion they planned to cut back on spending in the next three months, compared to 31 percent among all respondents.

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