Kearney’s latest Consumer Stress Index report predicts that the current market is in a moment of calm before the storm with calculations of consumer sentiment mirroring consumer behavior and spending in the market.

The authors of the report said that the findings “provide a snapshot of sentiment unclouded by immediate reactions to these economic changes,” adding that predicting consumer behavior is never straightforward. Notably, Kearney Consumer Institute’s surveys were taken ahead of tariff announcements.

Overall, the Consumer Stress Index report revealed a general sentiment that consumers “feel less flexible and less able to impact the macroeconomic challenges they are facing” as they continue to be pulled in different directions, with global uncertainty as a persistent factor.

Compared to the consumer stress index taken during the first quarter of 2024, Katie Thomas, lead at Kearney Consumer Institute, said “a critical development is that consumers have moved from a phase of optimization to being on the brink of sacrifice.”

Thomas explained that in recent years a persistent and accurate narrative has been around the resilient consumer and that despite rising prices, they had continued to spend. But tariffs could put consumers over the edge in terms of prices and job security.

“The most notable change in this edition is the sharp increase in consumer concern about trade disputes,” said Thomas. According to Kearney’s data, in third-quarter 2024, only 36 percent of consumers expressed concern about trade disputes affecting them personally, but by first-quarter 2025, that number had surged to 54 percent — a 50 percent increase. The findings represent a significant shift in consumer awareness of macroeconomic trade implications.

Thomas explained that without buffers, like stimulus checks, and post-pandemic spending gone, “retailers should expect consumer resilience to run out when tariffs and additional price pressures hit.” Reactions will be delayed but retailers should prepare for a lag effect where consumers “wait and see” before purchasing.

“Most consumers will wait until price increases hit shelves before changing their habits — a delay that could mask the full impact of tariffs until later this year,” said Thomas. “This means the current calm could suddenly shift to significant behavioral changes once new costs become visible.”

Looking specifically at consumers in the U.S., Kearney’s research found that the current consumer stability is fragile and temporary, requiring retailers to have proactive strategies rather than relying on continued resilience.

“The overall picture suggests that while stress levels appear stable, consumers are reaching a breaking point in their ability to adapt to rising costs and economic pressures,” said Thomas. “Retailers need to understand that consumers have already absorbed substantial price increases and made significant behavioral adjustments. This apparent stability indicates that consumers are operating at their adaptation limits, not that they’re comfortable.”

Early indicators of recession behaviors are being seen across categories. As an example, Thomas pointed to hair care and salon services reporting a pullback in spending as consumers go longer between appointments or try to do the service at home.

“There is a general thoughtfulness around spending money, with many consumers price shopping, experimenting with private label and evaluating whether they need to purchase luxury goods or higher-ticket items,” said Thomas.

Apparel and footwear brands, Thomas told WWD, are particularly vulnerable to tariff impacts given their supply chains. This means consumers are likely to revert to pandemic-era behaviors such as delaying purchases and prioritizing essentials. “Brands can expect extended purchase cycles and increased price sensitivity.”

Kearney’s report also called out the beauty category as the company continues to watch for headwinds and tailwinds. While traditionally the lipstick effect has worked because consumers had fewer alternatives and established brand loyalties, the flood of new options in recent years means that not all brands will win. Thomas warned that this abundance of choices can “work against individual brands during economic stress, as consumers can find lower-priced alternatives or dupes, and often do not feel they are sacrificing quality or status.”

As brands look ahead, Thomas said that a key metric to watch will be job security.

“While the focus to date has largely been on how tariffs will impact prices, many brands are also considering layoffs or right-sizing their workforces,” said Thomas. “Consumers are already cutting back, but the budget will completely change if they are no longer employed.”