Major US retailers and airlines warn of slowing sales as inflation, layoffs, and tariffs shake the economy
Companies serving a broad spectrum of consumers—from budget-conscious shoppers to premium travelers—are observing a decline in demand, as reported by CNBC.
For years, resilient US consumers supported the economy despite persistent inflation, but business leaders now cite new hurdles, including high interest rates, shifting trade policies, and mass government layoffs.
Recent earnings calls and investor presentations have revealed that retailers and consumer-facing businesses experienced softer-than-expected first-quarter sales, leading many executives to temper expectations for the remainder of the year.
Factors such as unseasonably cool weather and uncertainty surrounding US President Donald Trump's trade policies have contributed to this downturn.
According to The Guardian, there are growing fears of a “Trumpcession” due to the impact of tariffs, which is putting pressure on the Federal Reserve regarding interest rate decisions.
Economists predict that Trump's new tariffs on imports from China, Canada, and Mexico will raise consumer prices and reduce spending at a time when inflation remains above the Federal Reserve's target.
In February, consumer confidence experienced its most significant drop since 2021, and a separate sentiment measure for March also fell short of expectations, as reported by Politico.
The University of Michigan's consumer sentiment index declined to 57.9 in mid-March from 64.7 in February, marking the lowest level since November 2022, according to The Wall Street Journal.
The slowdown is also evident in the air travel sector. Major US airlines—United, American, Delta, and Southwest—have reported a dip in demand this quarter, with American, Delta, and Southwest revising their first-quarter forecasts downward.
Delta CEO Ed Bastian attributed the decline to weaker consumer confidence, stating, “Consumers in a discretionary business do not like uncertainty.”
Additionally, safety concerns following recent airline incidents, including a Delta crash landing in Toronto, have further impacted the sector.
United CEO Scott Kirby pointed to a sharp decline in government-related travel, noting that government and adjacent contracts account for 4 to 5 percent of United's business and are currently down by about 50 percent.
American Airlines also cut its first-quarter earnings forecast, citing demand pressures and the impact of a fatal midair collision involving a US Army helicopter.
Beyond airlines, Walmart, a retail bellwether, has also signaled caution. Despite attracting higher-income consumers in recent years, Walmart's stock fell after it warned of slower profit growth ahead.
“We don't want to get out over our skis here,” Walmart CFO John David Rainey said, emphasizing a cautious outlook.
Retailers such as Dick's Sporting Goods, E.l.f. Beauty, and Abercrombie & Fitch have also issued subdued forecasts while expressing optimism for the second half of the year.
Dick's Sporting Goods Chair Ed Stack noted that uncertainty surrounding tariffs and inflation remains a concern for consumer spending.
Meanwhile, discount retailers catering to lower-income consumers have reported worsening financial conditions among their shoppers.
Dollar General CEO Todd Vasos highlighted that many customers can only afford essentials, adding that the company is not anticipating economic improvement in 2025.
Similarly, American Eagle cited weak consumer demand and colder-than-expected weather as factors affecting its first-quarter sales.
CEO Jay Schottenstein pointed to broader concerns, stating, “Consumers have the fear of the unknown... it makes everyone a little nervous.”
