As a marketer, it’s hard to understand the consumer these days. I think most of us would agree. They tell us they are anxious. Prices are still climbing. People have credit card debt, and savings levels aren’t too exciting. So why are they spending? Well, according to retail sales numbers released on September 16, US retail sales rose 1.2% in August after falling 0.5% in July (as revised). Even after accounting for gas prices, which rose significantly, sales grew 1.1%. The control group of retail sales rose 1.4%. But is this good, or should we be sounding alarm bells?
Here is where many marketers will make the mistake. They see headlines about retail sales rising 1.2% and assume the consumer is OK. It’s not about if the consumer is spending. It’s about why they are spending. Where they are spending, who is spending and what they are sacrificing to keep spending. This is where it gets interesting.
Stop Watching Consumer Spending as One Big Number
The average American consumer no longer exists… or at least, not the one people like to call “the consumer.” Millions of households are all in different stages of life financially. Homeowners with large investment accounts probably won’t care that much. But if you’re renting, using your credit card, and buying gas twice a week, you’ll feel the pinch more.
That is why I believe we need to place more emphasis on segmenting consumers based on their finances.
According to the New York Fed, household debt totaled $18.8 trillion as of Q2 2026. Credit card debt alone sits at $1.26 trillion. That being said, $21 billion was added to the national credit card debt last quarter. Approximately 4.7% of household debt is delinquent, and we’re seeing increases in new delinquency on autos and credit cards.
This doesn’t mean that consumers aren’t spending. They just may not be able to spend as much. As marketers, this is important to note.
Inflation Is Still Changing the Meaning of “Sales Growth”
Another stat marketers should know.
Prices are up 3.4% from last year in August per the Bureau of Labor Statistics. They rose 0.4% in August, mostly driven by gas. Gas was over a third of the month’s increase.
So remember, when your revenue is going up it does not always mean people are buying more of what you sell. If your category grew 5% in dollars and prices were up 4%. People may not be buying significantly more.
They may just be spending more on less. Unit sales should start appearing alongside revenue on dashboards. Frequency of transactions and items per basket as well as price/mix. You may have a brand seeing 6% revenue growth, but its units are declining. That’s probably a bigger issue than they realize.
Make sure you’re asking whether we are growing because people want our product or because we are selling to the same number of people at a higher price.
Watch the Savings Rate
An underrated metric that marketers should pay more attention to. Not a marketing metric either. Personal Saving Rate. Americans only saved 3.0% of their disposable personal income in July. According to the Bureau of Economic Analysis, consumer spending rose .2%. Which, when you account for inflation, “Real” consumer spending stayed about the same.
These two together are something to be concerned about. As we know, people can keep spending by lowering their savings rate or borrowing. Or they can shift spending across categories. But that can only go on for so long.
Which is why I think we should track the savings rate alongside retail sales on all CMO dashboards. If we see spending hold steady and savings decline. It may be time to ask if people are really spending or just trying to get by.
Watch What Consumers Do, Not Just What They Say
Even stranger… The University of Michigan’s preliminary reading of consumer sentiment came in at 47.8 for September. That’s down from 51.7 in August and about as low as we’ve seen sentiment. People think their financial situation and the business climate will get worse. So consumers went out and bought stuff.
I know what you’re thinking. Well, people can think the economy sucks and still purchase a TV. They can be worried about money and still go out to eat.
Complain that food is too expensive and buy tickets to a show for $200. This shows marketers how people FEEL about the current state of things. Transactional data shows what they do.
Both have their place. For short-term decisions, I would rather look at what they are doing.
Look at What Consumers Are Trading Down—and Trading Up
Perhaps it’s how they spend, not total spending.
Substitution.
Look at store brand.
Look at buying on sale.
Look at pack size.
Look at consumers downgrading.
Look at eating out vs. groceries.
Look at buying new vs used.
Look at credit being used.
Look at subscription boxes.
Look at when they aren’t replacing something.
Where they aren’t cutting back will surprise you.
People will not cut back across the board by 10% during an economic downturn.
They will decide what to cut back on.
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