Many U.S. families are tightening their budgets as new tariffs and ongoing inflation strain their finances.
Recent research from McKinsey’s ConsumerWise team shows that after a sharp decline in economic sentiment this spring, more people plan to change how they spend — even before higher prices take effect.
According to McKinsey, 43% of consumers list inflation as their biggest worry, with tariffs rising to second place at 29%. Nearly everyone surveyed had heard about tariffs in the news or discussed the topic with others.
1. Consumers cut back on nonessentials
Many shoppers fear higher costs and trade uncertainty and plan to reduce spending on extras.
McKinsey finds that half of consumers expect to delay buying discretionary items like electronics, jewelry, and dining out. Essentials such as groceries and gas are less likely to see big cuts.
According to McKinsey, many plan to switch to lower-priced brands and buy fewer items, a typical trade-down strategy households use to cope with rising costs.
2. Brand swapping and secondhand buying increase
Among consumers who expect to change their behavior, more than half plan to make traditional trade-down moves, such as switching to cheaper brands or buying secondhand items.
McKinsey reports that Gen Z, in particular, is more likely to purchase used goods — such as secondhand cars or thrifted clothing — as a response to price pressures.
3. Gen Z and millennials react faster than boomers
Spending shifts vary significantly by generation. According to McKinsey’s data, Gen Z and millennials are more likely to say they’ve changed — or plan to change — how they spend.
Boomers appear less reactive.
McKinsey notes that they were already the least likely to splurge, leaving them with fewer nonessentials to cut. Still, boomers were 12 percentage points more likely than other groups to reduce discretionary spending in response to tariffs.
4. Lower-income households adjust first
Household income also shapes consumer responses. McKinsey reports that lower-income consumers are 13 percent more likely to switch to lower-priced brands than households earning over $100,000 a year.
While wealthier baby boomers are least likely to alter their habits, budget-conscious seniors are more likely to cut back on extras. Lower-income groups tend to adjust first, while higher earners make fewer changes.
How consumers adapt
Tariffs may change over time, but the shifts in consumer behavior reveal how quickly people respond to financial uncertainty. As McKinsey’s findings show, many Americans aren’t waiting for prices to rise — they’re adjusting now.
The response spans income levels and generations, from younger shoppers going secondhand to seniors scaling back.
These changes could reshape spending patterns well beyond the current trade cycle if economic pressures persist.
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