What Do Global Trade Tensions Mean For Already-Beleaguered Consumers?

Escalating global trade tensions and a potential US recession are prompting consumers to cut spending, as shown by declining consumer credit performance and a drop in consumer confidence to its lowest point in 12 years. Rising household debt, record credit card balances and the resumption of student loan payments are further straining consumer finances. The prevalence of buy-now, pay-later arrangements among younger consumers also complicates the credit landscape, as these debts often go unreported.

S&P Global Ratings forecast modest US GDP growth of 1.9% and slower consumer spending growth. While Europe appears relatively stable, US tariffs are expected to affect consumer goods companies, particularly in Europe, the Middle East and Africa. Overall, the US consumer products and retail sectors face negative rating biases due to the pressures of tariffs, inflation and declining consumer confidence, creating a challenging environment for businesses.