Consumer spending accounts for roughly two-thirds of US GDP. As the consumer goes, so goes the broader economy.
Yet in 2026, the narrative surrounding the US consumer is conflicted. Affordability has become a buzzword, and headlines emphasize inflation fatigue, rising debt, and affordability pressures. Hard data tells a different story: retail sales growth continues and service-sector demand is resilient.
The reality lies in this divergence. Total Retail Sales have reached record highs, with growth expected to pick up modestly in 2026 before moderating in 2027 as part of normal business cycle behavior. While the labor market has loosened somewhat, it remains relatively tight by historical standards, supporting ongoing wage growth. This provides a structural foundation for continued spending.
At the same time, inflation has been stubborn. Price pressures are expected to persist in the 2%–4% range over the next two years, driven by fiscal policy, money supply expansion, wage pressures, and energy demand. Meanwhile, the ability to rely on savings and credit as available spending power is flattening, introducing a measurable downside risk.
Most importantly, income disparities are widening. Higher-income consumers are benefiting from asset appreciation, wage gains, and financial flexibility. Lower-income households, however, are increasingly constrained by necessities such as housing, food, and health care. This bifurcation is reshaping demand patterns across sectors.
In our latest Business Series Webinar, and we unpack where opportunities are strongest — including service-based categories and e-commerce — and where caution is warranted, such as in housing-adjacent sectors. Business leaders will gain a clearer understanding of how to segment their market, align pricing strategies, and position for sustained growth amid evolving consumer dynamics. Ready to translate these insights into strategy? Become an Insider today.
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Is the US consumer actually weakening, or are headlines overstating the risk?
Which income segments will drive retail and service growth in 2026?
How much room do businesses truly have to raise prices amid persistent 2%–4% inflation?
What leading indicators should I monitor to anticipate demand shifts in my sector?