Consumer spending in the US - Data and Analysis (1980-2032)

Consumer spending is estimated to reach $16.83 trillion in 2026, representing a 2.0% increase from 2025. This growth rate is muted compared to earlier years, as rising inflation driven by tariff policy and elevated energy prices linked to geopolitical tensions in the Middle East are tempering real consumer spending growth. Consumer sentiment has also weakened, with a smaller share of Americans reporting optimism about the economy and a greater willingness to pull back on discretionary spending.Consumer spending followed an uneven upward trend from 2021 to 2026, increasing at an annualized rate of 2.6%. The deployment of vaccines and Congressional fiscal support bills in 2021 drove an 8.8% increasing in spending as pent-up demand combined with elevated disposable income. However, in 2022, supply chain bottlenecks drove inflation to its highest levels since the early 1980s, while the ongoing war in Ukraine elevated global energy prices. The Federal Reserve responded by aggressively raising interest rates six times in 2022, which slowed consumer spending growth to just 3.0%. Further rate hikes in 2023, culminating in a Federal Funds Rate target range of 5.25% to 5.50%, continued to dampen growth, though resilient job creation helped consumer spending expand 2.6% that year. This broadly followed the same pattern in 2024, though rate cuts implemented by the Fed late in the year helped contribute to a higher consumer spending growth rate of 2.9%. Although the Fed continued to institute rate cuts in the latter half of 2025, tariff-related uncertainty also weighed on household sentiment, leading to a growth rate of 2.6%. A K-shaped economy has remained a critical macro trend throughout the current period, with the top 10.0% of earners accounting for nearly half of all spending, according to Moody's Analytics. The divide in spending between upper- and lower-income households has widened, as upper-income households continue to benefit from equity market growth and access to consumer credit. Additionally, most tax changes passed under the One Big Beautiful Bill Act (OBBBA) are expected to benefit households in the top income quintile, according to TD Bank. Because of this, the spending economy has remained increasingly reliant on higher-income households to set the pace for consumption.