U.S. Consumer Behavior in 2026: A Fractured Landscape

As the U.S. enters 2026, consumer behavior remains characterized by caution and complexity. Despite a surprisingly strong finish to 2025, where December retail sales rose over 4% year-on-year, analysts warn of potential challenges ahead. Consumer sentiment has reached its lowest point in over a decade, as reported by the Conference Board, raising concerns about the sustainability of spending amidst a cooling labor market and softening wages. Gregg Katz, Esri’s global business industry solutions lead for real estate, described the consumer outlook as "functional but fragile."

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The concept of a K-shaped economy illustrates the stark differences in financial experiences among various income groups. While lower-income households face significant challenges due to rising prices and a slowing job market, some higher-income consumers appear less affected. However, Katie Thomas, leader of the Kearney Consumer Institute, cautioned against overgeneralizing these trends. She noted that certain affluent consumers are feeling financially stretched, while some lower-income households manage to feel secure by living within their means. This divergence complicates the understanding of consumer behavior, as it defies the notion of a singular "average" consumer.

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In response to economic pressures, consumers across income levels are adopting more frugal spending habits. Many are utilizing coupons, seeking discounts, and opting for cheaper alternatives. Research from Numerator indicates that nearly 40% of U.S. consumers are actively shopping for sales, while a third report spending less overall. Meghann Martindale, director of market intelligence for retail at Avison Young, emphasized that consumers are now taking a holistic view of their budgets, integrating various expenses such as experiences and subscriptions into their financial planning.

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Local events and microeconomic factors are increasingly influencing consumer behavior and retail sales. For instance, disruptions caused by wildfires in Los Angeles and border patrol activities have negatively impacted traffic and sales in Southern California. Martindale highlighted the psychological effects of such events, noting that they contribute to a sense of uncertainty and instability in affected areas. This localized impact underscores the importance of understanding the broader context in which consumers make purchasing decisions.

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Retail experts emphasize the need for retailers to adapt to the evolving consumer landscape. Katz remarked on the paradox of healthy spending amidst low consumer sentiment, suggesting that consumers are recalibrating their financial priorities. Martindale pointed out the emergence of "microeconomies" shaped by localized events, which retailers must navigate to effectively engage with consumers.

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• “For 2026 I see the consumer being functional but fragile,” — Gregg Katz, Global Business Industry Solutions Lead, Real Estate at Esri

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• “K economy analytics tend to blend these divergent consumer behaviors together and then spread them like the data equivalent of peanut butter across a series of demographic cohorts, creating an ‘average’ consumer who does not, in fact, actually exist,” — Katie Thomas, Lead, Kearney Consumer Institute

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• “You can't discount the impact that that has on people psychologically — where they feel safe, where they want to shop,” — Meghann Martindale, Director of Market Intelligence, Retail, Avison Young

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As 2026 unfolds, the interplay of economic factors, consumer sentiment, and localized events will continue to shape the retail landscape in the United States.

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