We keep hearing that the plunge in consumer sentiment isn’t showing up in the economic data yet. Well, there is one data point that is feeling the effects, and it turns out its a pretty important one.

Real consumer spending has had a difficult 2025 so far. January’s results (-0.6%) were the worst in 4 years, and February (+0.1%) did nothing to change that.

If we look at results from a quarter-over-quarter basis, much like how real GDP is calculated, we can see that Q1 so far is down -0.5%. The only other times real spending has been down that much on a quarterly basis is Q1 2020 (COVID) and Q4 2008 (GFC).

I’m not implying anything here. You never want to base analysis on any one data point. Especially when the data is going to be skewed/messy for a while. We will get updated consumer spending data on Thursday, that could render this chart completely useless.

The saying goes, pay attention to what people are doing, not what they say they are going to do. I’m simply pointing out that there actually is a data point that is showing the consumer is pulling back.