• by Sarah Mahoney  @mahoney_sarah, February 14, 2025

The surprising news about inflation, which many experts believed would continue to ease, rattled economists.

More data about consumer debt also unsettled experts. Credit card debt hit a record $1.21 trillion, the Federal Reserve of New York reported, even in the face of high interest rates. Consumers charged up a storm over the holiday period, pushing balances up by $45 billion. Credit card balances are up 7.3% year over year. Credit card delinquency rates have hit their highest levels since 2011.

Widespread layoffs are also casting a shadow. While the federal government’s purge is hogging the headlines, at about 200,000 layoffs so far, private companies are also adding to the lost jobs count. Walmart is laying off more than 800 people, Estee Lauder is axing 7,000, and Meta has begun eliminating 3,600. Salesforce, Workday, Jeff Bezos’ Blue Ocean and Boeing also announced significant cuts this week.

And with tariffs dominating every news cycle, consumers are increasingly apprehensive that family budgets will be pressured.

The Conference Board’s Consumer Confidence Index dropped 5.4% in January, and the Present Situation Index, which asks people to assess current business and labor market conditions, fell sharply in January, dropping 9.7 points. The segments losing the most confidence? Those 55 and under and those earning $125,000 or more per year.

It’s hard to say what all that may mean for consumer spending at retail. Coresight Research tracks consumer confidence weekly and says the flurry of discouraging indicators doesn’t necessarily mean bad things for retailers.

Even though Coresight’s surveys have detected a “meaningful decline in consumer sentiment toward economic and personal financial prospects since mid-January,” the company isn’t changing its expectations for overall retail expansion in 2025, writes John Mercer, head of global research and managing director of data-driven research, in a recent note.

But the group is keeping a close eye on tariffs, which pose significant inflationary risks “and, consequently, threats to consumer sentiment and propensity to spend.” In the research company’s latest survey, 61% of consumers believe tariffs will increase prices.