American Consumers Are Getting Thrifty Again

Consumer spending stagnated in the first half of this year, according to federal data issued last week, and the CEOs of Chipotle Mexican Grill, Kroger and Procter & Gamble, among others, are telling investors that their customers are more strapped—or appear to feel that way.

“There’s a lot of consumer anxiety,” said Dirk Van de Put, chief executive of Mondelez International, which makes Oreo cookies, Ritz crackers and Cadbury chocolate. Global sales of snacks rose last quarter, but U.S. sales fell a lot.

After spending lavishly through the postpandemic years on everything from home improvement to travel, U.S. consumers find themselves in a summer of economic uncertainty. Beef prices are the highest on record. Daily latte habits now face as much as an additional 50% tariff on coffee. Ford Motor, which makes the most popular vehicle in the U.S.—the F-150 truck—said the Trump administration’s flurry of trade deals have heaped a punishing level of duties on the automaker. It has already raised prices on some cars and trucks to help cover the added costs.

Shoppers, wary about inflation, job expectations and their personal finances, are dialing down their spending to focus on the essentials and forego the extras, executives said. The company behind Invisalign said patients are putting off orthodontic treatment and choosing metal braces over pricier clear alternatives.

P&G, which sells daily-use items such as Tide, Charmin and Pantene, said it is noticing signs of slower spending across essential products, too.

Consumers on both ends of the spectrum—low income and higher income—are reacting to the current volatility they are experiencing, P&G Chief Financial Officer Andre Schulten said, “We see consumption trends consistently decelerating.”

Even though people still need to do laundry, wash their hair and put diapers on their babies, Americans are using up the goods in their pantry and seeking value by buying in bulk to economize or purchasing smaller packs to spend less. This new behavior is driven by worries about the future, whether over immigration policies, inflation or how tariffs will filter down to consumers, said P&G Chief Executive Jon Moeller.

“People are frustrated, and I would say understandably frustrated, with the lack of certainty,” he told investors.

Architect Kevin Ervin Kelley and his family have cut back on nights out. PHOTO: HEATHER GILDROY

Kevin Ervin Kelley, an architect who lives in Los Angeles, says his family has made budget cuts at every level. Gone are the date nights with his wife where they easily spent $150 on dinner. Instead of vacationing at a resort in Hawaii or Mexico, this year they are visiting in-laws with their 7-year-old daughter.

The couple has maintained their incomes, Kelley says, but swings in retirement funds and questions about how tariffs could push up prices have given them pause.

“This time feels different,” he said. “You hunker down and wait it out.”

The Kelleys still indulge a few of their daughter’s requests, but not all. She recently got a “hard no” to her wish for a new Smurfs backpack, Kelley said. She can keep using her Wicked-themed bag from last year, he added.

He has also noticed that at children’s birthday parties, there is a new parent suggestion: no gifts necessary.

“The ‘what the heck’ purchase is completely gone,” Kelley says. “We’re only doing things that are known quantities, that will get the job done.”

At Kroger, shoppers are making more trips to the store but putting less in their carts. They are also clipping coupons again and scrimping on discretionary items such as alcohol. The biggest supermarket chain in the U.S. is selling more generic-brand products and offering promotions to entice customers to keep coming back, even as receipts per shopping cart shrink.

“What we’re seeing is different shopping behaviors,” Kroger Chief Executive Ron Sargent said. “Customers are looking for value.”

Families who dine out are trading down for cheaper options, too. Fast-casual chain Olive Garden is getting more business from households with annual incomes over $150,000, while those who earn less than $50,000 are showing up less. Sales at burrito chain Chipotle, where a build-your-own bowl can cost $10 to $16, were down last quarter, while Domino’s Pizza reeled in more diners with its two-for-one deal and other promotions.

Americans now spend nearly four hours a day thinking about money, making it the equivalent of a part-time job, according to a June survey by Empower, the 401(k) giant. More than half of the 2,206 adults surveyed said they are thinking about money more often than they did last year.

College student Chelsea Hollins is using coupons to control spending. PHOTO: CHELSEA HOLLINS

Chelsea Hollins, 26 years old, and her boyfriend usually fly off for a vacation each year. This summer, they opted for a cheaper camping trip. Even Walmart’s prices seem to be going up, and Hollins has to stretch her hard-earned dollars as a full-time college student and part-time paid intern at the Detroit Institute of Arts. She goes to multiple stores to find staples, hunting for the lowest prices. Aldi, she says, has the best deals on meat.

She also canceled her DoorDashsubscription and downloaded the coupon apps for Dollar General and Walgreens so she can compare promotions.

“I was not doing couponing before,” Hollins says. “I’m getting into it because you have to do that now.”

Amanda Verdino used the Rocket Money app to analyze her recurring subscription costs. The 39-year-old marketing director at employee-benefits company Forma downgraded her Ancestry.com account to save $20 a month, and canceled most of her “Subscribe and Save” orders from Amazon.com once she realized she already had items on that list stockpiled.

Marketing executive Amanda Verdino has cut her subscription costs. PHOTO: AMANDA VERDINO

“We really looked at what we can trim,” she said. “If you go into our garage, you’ll see a stack of a zillion paper towels and a zillion rolls of toilet paper, and under every sink is at least one or two packs of toothpaste. I thought: Why are we just blindly paying for more of this stuff?”

A May poll of consumer sentiment conducted by consulting firm McKinsey found most people planned to adjust their spending in response to tariffs. Rising prices was the top concern of those surveyed, far outweighing issues such as immigration, international conflict and political polarization.

Kiara Carniewski, 31, is expecting her second child later this month and has worked hard to take her expenses down by a range of 60% to 70%. From her weekly grocery bill to luxury skincare products, she has been ruthless, she said. “If it’s not necessary, it’s no longer purchased.”

A few weeks ago she found herself racked with guilt after splurging on a $5 coffee. That expense is nothing compared to her former guilty pleasure of perusing the aisles at T.J. Maxx and HomeGoods. “Back then, I was like, ‘Life is short. Treat yourself!’ ” she said.

Now, she is keenly aware of how much is on the line for her family’s finances.

“I really believe that the American economy has a massive math problem: Everything is getting more expensive but wages have not.”

Write to Katherine Hamilton at katherine.hamilton@wsj.com and Natasha Khan at natasha.khan@wsj.com