The situation: Several recent macroeconomic indicators point to a tough and increasingly uncertain economic environment.

• Consumers don’t feel good. June data from the two main sentiment trackers diverged: The Conference Board reported a dip in confidence, while the University of Michigan saw its first uptick in six months. Still, both measures are well below pre-2025 levels.
• Inflation is trending in the wrong direction. The Fed’s favorite inflation gauge, the personal consumption expenditures price index (PCE), increased 2.3% YoY in May, up from 2.1% in April. Core PCE, which excludes volatile food and energy prices to provide a more reliable indicator of inflation, rose 2.7%, ahead of analysts’ expected 2.6% and up from 2.5% the previous month. While there’s some good news if you zoom out—PCE is up just 1.7% on an annualized basis over the past three months—that may not last, especially since retailers like Walmart and Best Buy have said they’re hiking prices due to tariff pressures.
• Wages are down. Real disposable income fell 0.7% in May—a sharp reversal from April’s 0.6% gain and the first time since last August that inflation outpaced wage growth.
• Shoppers are pulling back. Personal consumption expenditures fell 0.3% YoY, after adjusting for inflation, per the US Commerce Department. Goods spending fell 0.8%, as consumers who previously pulled purchases forward in anticipation of price hikes are now holding back.

Certainty is a ways away: Geopolitical instability and the Trump administration’s evolving trade policies—including the looming expiration of the 90-day tariff pause in July—are compounding uncertainty, making it harder for both businesses and consumers to plan ahead.

• Clarity isn’t likely to come soon. Trade agreements often take years to negotiate, and even preliminary frameworks—like the one the US announced with the UK—are increasingly unlikely to materialize before the tariff pause expires.
• Treasury Secretary Scott Bessent acknowledged as much on Friday, shifting the goalpost for most of those agreements from early July to Labor Day.
• And geopolitical conflicts in Iran, Ukraine, and elsewhere could boil over at any minute, which could unleash additional inflationary and supply chain pressures on retailers.

Our take: Uncertainty has cast a long shadow over the retail industry all year—and clearer skies aren’t on the horizon.

Retailers trying to weather the economic storm must focus on delivering compelling value to cost-conscious consumers. That means leaning into what makes their brand stand out, whether it’s quality, service, loyalty perks, or meaningful innovation.