Consumers Navigate Summer 2025 With Caution As Economic Anxiety Mounts, KPMG Study Finds

Amid a backdrop of persistent inflation, high-interest rates, and a turbulent geopolitical landscape, American consumers are entering the summer of 2025 with a sharper eye on their wallets and a willingness to reshape how—and why—they spend. According to new findings from KPMG’s latest U.S. Consumer Pulse Survey, anxiety around personal finances and the broader economy is not just simmering beneath the surface—it’s beginning to fundamentally alter the consumer psyche.

Economic Unease Dictates Spending Patterns

The KPMG survey, which polled more than 1,100 U.S. consumers in May 2025, paints a portrait of growing conservatism. Sixty-four percent of respondents said they’re more worried about their finances today than they were last year, a notable jump from 45% reported in last year’s summer survey. The leading causes: higher prices for everyday goods and services, softening labor markets, and sustained interest rates that are placing pressure on household budgets.

“It’s clear that consumers are feeling the squeeze,” says Jeff Barna, U.S. National Sector Leader for Consumer & Retail at KPMG. “They’re looking for ways to save, and many are rethinking both big and small spending decisions.”

Data from the survey reveals that 72% of shoppers expect to cut back on discretionary spending over the coming three months. Vacation budgets, casual dining, and non-essential retail purchases are first on the chopping block. More tellingly, nearly one in three consumers say they’re re-evaluating plans for large purchases they’d previously intended to make this year, including home renovations and major electronics upgrades.

From Saving to Survival Strategies

With economic unease growing, saving is once again en vogue. Half of all participants in the survey cited increased contributions to emergency funds—a stark contrast to the pandemic-era trend that saw savings rates plummet. More consumers are turning to private-label and generic brands to stretch their dollars. Seventy-six percent reported hunting more actively for promotions, while two-thirds said they were shifting at least some grocery shopping to discount retailers or warehouse clubs.

But beyond belt-tightening, the survey suggests a marked shift in consumer psychology. “Value, for many, has become synonymous with necessity rather than desire,” says Barna. “There’s a discernible move from ‘I want’ to ‘I need’ in spending priorities this season.”

Generative AI and Social Commerce Redefine Shopping Journeys

Even as wallets tighten, KPMG’s research spotlights a digital renaissance in how Americans shop. The integration of generative artificial intelligence into retail platforms is rapidly reshaping browsing and buying behaviors. Half of consumers said they have used AI-enhanced search or virtual s to guide shopping decisions in the past six months—up from just 31% a year ago.

For millennials and Gen Z, the numbers are even higher. They’re leveraging AI tools for product recommendations, price comparisons, and budgeting, noting faster, more personalized experiences as key advantages. Many respondents said these tools help them identify hidden discounts or zero in on the highest-rated products.

Social commerce is also surging, particularly among younger consumers. Nearly 60% of those under 40 report making a purchase via social media platforms in the past quarter, a figure driven by influencer endorsements, targeted ads powered by generative AI, and seamless checkout integrations. Facebook and Instagram continue to lead, but TikTok’s commerce platform is quickly gaining market share.

“The shopper journey is more fragmented and dynamic,” says Melissa Lee, principal, Customer Advisory at KPMG. “Consumers are blending digital and physical touchpoints—one moment browsing in a store, the next comparing prices with an AI chatbot or completing purchases via a social app.”

Trust and Data Privacy Remain Top Concerns

As AI-powered retail and social commerce gain traction, Americans are weighing convenience against privacy. Fifty-eight percent of respondents expressed concern about how retailers and tech companies use their personal shopping data. Among those hesitant to embrace AI-enabled shopping, security and transparency were the most frequently cited reasons.

Retailers are responding by rolling out more visible privacy controls, improved AI explainability, and clear data usage policies. For some consumers, this represents a step in the right direction; for others, trust remains a major barrier to adoption.

Brands Face a Balancing Act

For America’s brands, the new landscape is fraught with challenges. On the one hand, they’re under pressure to deliver more value to budget-conscious shoppers. On the other, they must invest in advanced technologies to meet evolving expectations and outpace competitors in a crowded digital marketplace.

There are signs of opportunity, however, for brands that strike the right tone. Shoppers responding to the KPMG survey highlighted companies that offer clear value propositions, invest in ethical data practices, and leverage AI for meaningful personalization as most deserving of their loyalty.

“In tough times, consumers gravitate to brands that understand them and respect their realities,” says Lee. “Trust, convenience, and value will define who wins and loses in retail this summer.”

The Long View

As summer 2025 begins, the American consumer appears cautious but not pessimistic. While economic uncertainty is curbing spending enthusiasm for now, many respondents still plan to splurge when the circumstances feel right. For retailers and consumer brands, the path forward is clear—even as wallets stay shut, the expectation for smarter, more helpful, and trustworthy commerce is wide open.