U.S. consumer spending slowed sharply in the first half of 2025 as a cooling labor market, higher tariffs, and volatile equity markets weighed on household confidence, according to a new Fitch Ratings report and government data.
The pullback raises concerns about whether the resilience of American shoppers—who account for roughly two-thirds of gross domestic product—can continue into the year-end holiday season.
Fitch’s latest Consumer Health Monitor, released Aug. 21, showed that household spending growth decelerated to 0.5 percent in the first quarter and 1.4 percent in the second, down from nearly 4 percent in the second half of 2024.
Spending on durable goods—a bellwether of consumer confidence in big-ticket purchases—fell by an annualized 3.7 percent in the first quarter. Fitch attributed the decline to trade policy uncertainty and stock market volatility, which dented household sentiment….