5 Ways Recession Fears Have Impacted America’s Spending Habits

A new CouponFollow survey indicates that over half (56%) of Americans have already cut back on spending due to recession concerns in 2025, despite J.P. Morgan recently lowering its recession probability forecast to a "toss up" from 60% a month ago. The survey highlights reduced spending on non-essential items like clothes and travel, as well as shifts in grocery shopping habits, with 43% buying fewer groceries or limiting quantities and 62% dining out less often. Furthermore, 29% of Americans have dipped into savings to cover everyday expenses, reflecting a broad impact of economic uncertainty on consumer behavior.

Analysis

Recession fears in 2025, significantly influenced by U.S. tariff policies, are demonstrably reshaping American consumer behavior, despite a recent U.S.-China trade deal offering some relief and J.P. Morgan lowering its recession probability from 60% to a "toss up." A CouponFollow survey indicates a substantial consumer pullback, with 56% of U.S. adults already curtailing spending and an additional 21% intending to do so. These reductions are notable across discretionary items like clothing and travel, and also affect essential categories, as evidenced by 43% of consumers buying fewer groceries or limiting quantities, and 62% dining out less. Furthermore, the economic uncertainty has compelled 29% of Americans to withdraw from savings in the past six months to meet daily expenses, a figure peaking at 33% for Gen X. J.P. Morgan's Chief U.S. Economist Michael Feroli's caution that "recession risks are still elevated" underscores the ongoing fragility, suggesting that observed shifts in spending habits are a rational response to persistent economic concerns.

Key Decisions for Investors

• Investors should closely monitor consumer spending data and sentiment indicators, as the reported 56% cutback in spending and 29% draw on savings by Americans signal potential headwinds for consumer discretionary sectors.
• Consider re-evaluating exposure to companies highly dependent on robust consumer demand, particularly in non-essential retail, travel, and dining, given the significant behavioral shifts towards frugality and reduced outings highlighted in the survey.
• Despite J.P. Morgan's lowered headline recession probability to a 'toss up', their persistent warning of 'elevated risks' warrants maintaining a degree of caution, potentially favoring defensive asset allocations or strategies that can mitigate downside in an economic slowdown.