Research
April 16, 2026
Consumer outlook
Elevated gasoline prices and a cooling labor market are testing consumer resilience
After contending with a weakening labor market for the last several months, consumers can now add elevated gasoline prices to their list of economic challenges.
The national average for a gallon of regular gasoline topped $4.10 this week, which was up sharply from the sub-$3 prices that consumers were paying in February. While the full impact on household budgets remains to be seen, higher pump prices will likely test consumers’ capacity to continue spending in discretionary categories like restaurants. We have already seen weakening in sentiment measures, and consumers remain anxious about the economy overall.
Meanwhile, the resilient U.S. labor market, which has fueled much of the current consumer-driven economic expansion, continues to be defined by fits and starts, cooling notably over the course of the past year. At the same time, the national unemployment rate remains low by historical standards – just 4.3% in March 2026 – and there hasn’t been a significant uptick in layoffs. Still, the recent slowdown in job growth is a sign that a key catalyst of consumer activity may be losing momentum.
It’s not just a softer labor market that can impact consumers’ capacity to spend. Rising debt levels – along with an uptick in delinquency rates – will limit the ability of some households to keep spending. However, the debt-to-income ratio remains reasonably manageable in historical terms, which reduces the worry somewhat.
In addition, household wealth keeps reaching new record levels, which will continue to boost the confidence of consumers with homes and investments.
Despite the mixed signals, the underlying fundamentals remain generally positive, which supports a cautiously optimistic outlook for continued economic growth. As long as the recent surge in gasoline prices remains a temporary phenomenon, it’s likely that consumers on the aggregate will retain the financial wherewithal to continue spending in 2026.
This article presents the latest trends in key indicators that impact consumers’ ability and willingness to spend. Visit this page throughout the year for ongoing analysis of the state of the American consumer.
Job growth was choppy in recent months
Employment growth in the national economy was uneven in recent months, often alternating between sizable gains and declines on a month-to-month basis. Looking beyond the recent choppiness, the moderating trend dates back to the beginning of 2025. The economy added an average of 21,400 net new jobs each month during the past 15 months. That was down sharply from an average monthly gain of more than 120,000 jobs during 2024.
Consumer confidence remains dampened
Coinciding with the slowdown in the labor market, The Conference Board’s Consumer Confidence Index showed signs of rising economic uncertainty among households. This measure of consumer sentiment trended steadily lower into 2026, before ticking up slightly in February and March. The downward trend was largely due to declines in the expectations component of the index, which measures consumers’ short-term outlook for income, business, and labor market conditions. Consumers’ assessment of current economic conditions also deteriorated in recent months, with February’s reading representing a 5-year low.
Wage growth slowed in recent months
Along with a choppy labor market, wage growth slowed in recent months. Average hourly earnings of private sector employees increased 3.5% between March 2025 and March 2026. That was more than 2 percentage points below the strong gains posted during 2022, and represented the weakest 12-month wage growth in nearly 5 years. Despite the recent slowdown, wage growth remained above the 3.3% average increase during 2019.
Savings rate declined in recent months
Although nominal personal income continues to rise at a moderate pace, persistent inflation means growth is somewhat muted in inflation-adjusted terms. At the same time, consumer spending has been outpacing income growth, which means many households are tapping into their savings to support these expenditures. This led to the personal savings rate falling to 4.0% in February, which is more than a full percentage point below the early-2025 readings. It was also well below the pre-pandemic savings rate, which averaged 6.5% between 2017 and 2019.
Household wealth surged in recent quarters
Household wealth continues to trend sharply higher, rising by more than $2 trillion in the fourth quarter of 2025. That followed an increase of more than $13 trillion during the previous two quarters, and represented the eighth increase in the last nine quarters. The only interruption of the positive trendline was a modest dip in the first quarter of 2025, which was due largely to a decline in the stock market. In total during the last nine quarters, total household net worth jumped by more than $32 trillion. That positively impacts consumers’ willingness to spend on discretionary items, including restaurants.
Household debt continues to rise
Household debt trended steadily higher in recent years, with aggregate balances reaching $18.8 trillion by 2025:Q4. Mortgages represent the bulk of household debt at 70%, followed by auto loans (9%), student loans (9%) and credit cards (7%).
Debt to income ratio remains manageable
Even though debt levels are rising, it remains manageable in relation to income. On average during 2025, the total household debt balance was about 81% of total disposable personal income. Aside from two quarters during the pandemic, that’s the lowest debt-to-income ratio in more than two decades. It’s also well below the record highs of more than 116% registered during the Great Recession in 2007 and 2008.
Revolving credit balances continue to rise
Revolving consumer credit rose sharply during the last 5 years, following an early-pandemic period during which balances dropped by more than 12%. By February 2026, total revolving credit balances topped $1.3 trillion, which was $281 billion (or 27%) above their pre-pandemic peak. While balances continue to rise, the rate of growth slowed somewhat in recent months. Total revolving credit balances rose just 2.8% during the last 12 months, which was well below the strong gains posted during the previous 4 years.
Debt service remains in check
Despite the elevated debt levels, debt service remains manageable for households on the aggregate. The Federal Reserve’s Debt Service Ratio, which is the ratio of total required household debt payments to total disposable income, was just over 11% in 2025:Q4. While that was higher than the lows posted during the first half of 2021, it remained slightly below pre-pandemic readings.
Overall delinquency rates are trending higher
While debt service levels remained manageable in historical terms, overall delinquency rates trended higher in recent quarters. As of 2025:Q4, 4.8% of outstanding household debt was in some stage of delinquency. That was up more than 2 full percentage points from the recent low of 2.5% in 2022:Q4, and represented the highest level since 2017:Q3 (4.9%).
Credit card delinquencies are up sharply
Along with an uptick in overall delinquency rates, the percentage of credit cards that were severely delinquent rose dramatically in recent quarters. As of 2025:Q4, 12.7% of credit card debt was at least 90 days delinquent. That was up from a recent low of 7.6% in 2022:Q3 and represented the highest level in nearly 15 years.
The national average for a gallon of regular gasoline topped $4.10 this week, which was up sharply from the sub-$3 prices that consumers were paying in February. While the full impact on household budgets remains to be seen, higher pump prices will likely test consumers’ capacity to continue spending in discretionary categories like restaurants. We have already seen weakening in sentiment measures, and consumers remain anxious about the economy overall.
Meanwhile, the resilient U.S. labor market, which has fueled much of the current consumer-driven economic expansion, continues to be defined by fits and starts, cooling notably over the course of the past year. At the same time, the national unemployment rate remains low by historical standards – just 4.3% in March 2026 – and there hasn’t been a significant uptick in layoffs. Still, the recent slowdown in job growth is a sign that a key catalyst of consumer activity may be losing momentum.
It’s not just a softer labor market that can impact consumers’ capacity to spend. Rising debt levels – along with an uptick in delinquency rates – will limit the ability of some households to keep spending. However, the debt-to-income ratio remains reasonably manageable in historical terms, which reduces the worry somewhat.
In addition, household wealth keeps reaching new record levels, which will continue to boost the confidence of consumers with homes and investments.
Despite the mixed signals, the underlying fundamentals remain generally positive, which supports a cautiously optimistic outlook for continued economic growth. As long as the recent surge in gasoline prices remains a temporary phenomenon, it’s likely that consumers on the aggregate will retain the financial wherewithal to continue spending in 2026.
This article presents the latest trends in key indicators that impact consumers’ ability and willingness to spend. Visit this page throughout the year for ongoing analysis of the state of the American consumer.
Job growth was choppy in recent months
Employment growth in the national economy was uneven in recent months, often alternating between sizable gains and declines on a month-to-month basis. Looking beyond the recent choppiness, the moderating trend dates back to the beginning of 2025. The economy added an average of 21,400 net new jobs each month during the past 15 months. That was down sharply from an average monthly gain of more than 120,000 jobs during 2024.
Consumer confidence remains dampened
Coinciding with the slowdown in the labor market, The Conference Board’s Consumer Confidence Index showed signs of rising economic uncertainty among households. This measure of consumer sentiment trended steadily lower into 2026, before ticking up slightly in February and March. The downward trend was largely due to declines in the expectations component of the index, which measures consumers’ short-term outlook for income, business, and labor market conditions. Consumers’ assessment of current economic conditions also deteriorated in recent months, with February’s reading representing a 5-year low.
Wage growth slowed in recent months
Along with a choppy labor market, wage growth slowed in recent months. Average hourly earnings of private sector employees increased 3.5% between March 2025 and March 2026. That was more than 2 percentage points below the strong gains posted during 2022, and represented the weakest 12-month wage growth in nearly 5 years. Despite the recent slowdown, wage growth remained above the 3.3% average increase during 2019.
Savings rate declined in recent months
Although nominal personal income continues to rise at a moderate pace, persistent inflation means growth is somewhat muted in inflation-adjusted terms. At the same time, consumer spending has been outpacing income growth, which means many households are tapping into their savings to support these expenditures. This led to the personal savings rate falling to 4.0% in February, which is more than a full percentage point below the early-2025 readings. It was also well below the pre-pandemic savings rate, which averaged 6.5% between 2017 and 2019.
Household wealth surged in recent quarters
Household wealth continues to trend sharply higher, rising by more than $2 trillion in the fourth quarter of 2025. That followed an increase of more than $13 trillion during the previous two quarters, and represented the eighth increase in the last nine quarters. The only interruption of the positive trendline was a modest dip in the first quarter of 2025, which was due largely to a decline in the stock market. In total during the last nine quarters, total household net worth jumped by more than $32 trillion. That positively impacts consumers’ willingness to spend on discretionary items, including restaurants.
Household debt continues to rise
Household debt trended steadily higher in recent years, with aggregate balances reaching $18.8 trillion by 2025:Q4. Mortgages represent the bulk of household debt at 70%, followed by auto loans (9%), student loans (9%) and credit cards (7%).
Debt to income ratio remains manageable
Even though debt levels are rising, it remains manageable in relation to income. On average during 2025, the total household debt balance was about 81% of total disposable personal income. Aside from two quarters during the pandemic, that’s the lowest debt-to-income ratio in more than two decades. It’s also well below the record highs of more than 116% registered during the Great Recession in 2007 and 2008.
Revolving credit balances continue to rise
Revolving consumer credit rose sharply during the last 5 years, following an early-pandemic period during which balances dropped by more than 12%. By February 2026, total revolving credit balances topped $1.3 trillion, which was $281 billion (or 27%) above their pre-pandemic peak. While balances continue to rise, the rate of growth slowed somewhat in recent months. Total revolving credit balances rose just 2.8% during the last 12 months, which was well below the strong gains posted during the previous 4 years.
Debt service remains in check
Despite the elevated debt levels, debt service remains manageable for households on the aggregate. The Federal Reserve’s Debt Service Ratio, which is the ratio of total required household debt payments to total disposable income, was just over 11% in 2025:Q4. While that was higher than the lows posted during the first half of 2021, it remained slightly below pre-pandemic readings.
Overall delinquency rates are trending higher
While debt service levels remained manageable in historical terms, overall delinquency rates trended higher in recent quarters. As of 2025:Q4, 4.8% of outstanding household debt was in some stage of delinquency. That was up more than 2 full percentage points from the recent low of 2.5% in 2022:Q4, and represented the highest level since 2017:Q3 (4.9%).
Credit card delinquencies are up sharply
Along with an uptick in overall delinquency rates, the percentage of credit cards that were severely delinquent rose dramatically in recent quarters. As of 2025:Q4, 12.7% of credit card debt was at least 90 days delinquent. That was up from a recent low of 7.6% in 2022:Q3 and represented the highest level in nearly 15 years.