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Shoppers navigate the aisles of King of Prussia Mall as global markets brace for potential challenges stemming from U.S. President Donald Trump’s recent decision to impose import tariffs on various countries, reflecting the state of consumer behavior in King of Prussia, Pennsylvania, as of April 3, 2025.
America’s economic landscape in early 2025 illustrates a pronounced divide among consumers.
While those with lower incomes are curtailing their spending to prioritize essential items, wealthier individuals continue to indulge in luxuries such as fine dining and high-end travel, according to preliminary data from U.S. credit card providers.
The uncertainty triggered by the initial phases of President Trump’s trade policies has raised concerns among investors and economists about the potential downstream effects on the broader economy. Early indicators suggest heightened stress levels among already vulnerable populations.
In a revealing report, Synchrony, which issues store cards for major retailers like Lowe’s and T.J. Maxx, reported a 4% decline in spending during the first quarter of the year. This contrasts sharply with a 6% increase reported by American Express, as well as a similar growth at JPMorgan Chase, which primarily serves more affluent customers with stronger credit histories. American Express noted particular increases in spending on dining, which rose by 7%, and on first and business-class airfare, which surged by 11% compared to the previous year.
Synchrony’s CEO Brian Doubles commented on April 22 that while “the consumer is still in pretty good shape” overall, there is a trend of “selective spending.” He noted that lower-income cardholders began pulling back on discretionary spending around a year ago, as inflation increasingly eroded their purchasing power.
Struggling to Keep Up
Interestingly, a growing number of Americans are slipping into debt as they rely on their credit cards. The proportion of credit card users making only minimum monthly payments surged to 11.1%, the highest figure in a dozen years, according to data from the Federal Reserve Bank of Philadelphia released recently.
Nonetheless, credit card issuers targeting wealthier clientele remain largely cushioned from worries surrounding tariffs, inflation, and the looming prospect of a recession later this year.
“It’s apparent that the high end has performed better, while the low end is retracting more significantly,” said Brian Foran, an analyst at Truist covering the banking sector, in a correspondence. This sentiment is echoed across conversations with credit card companies and industry colleagues focused on consumer and retail behaviors.
Citigroup, a prominent player in the credit space, also illustrated this trend. Despite a 5% decrease in spending in its retail card division, spending associated with the bank’s own branded cards—used predominantly by those with higher credit scores—increased by 3%.
Both Citigroup and Bread Financial, another provider of retail and co-branded cards similar to Synchrony, noted a shift in consumer spending toward essentials and away from discretionary items like travel and entertainment, driven by apprehensions that tariffs may inflate prices for certain goods.
This pattern may temporarily bolster current spending, yet it risks dampening demand in the longer term.
“Consumers are investing more in electronics, home furnishings, and auto parts,” said Perry Beberman, CFO of Bread. He elaborated, stating, “People are weighing whether to purchase that big-screen television or opt for other items if inflation persists at anticipated rates. This uncertainty remains a significant variable.”
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