New Data Shows Inflation Worries Grip US Consumers in Echo of the Pandemic

Economically, it’s starting to feel like the height of the pandemic.

Consumers in the United States, warily eyeing the impact of the President Donald Trump administration’s global trade war, are increasingly worried about higher prices on everything from Mexican avocados to China-made iPhones. Shoppers expect the average cost of all goods, whether imported or made in America, and services to spike nearly 7% over the next 12 months, a forthcoming report from PYMNTS Intelligence shows.

If that feels like déjà vu, it’s because barely three years ago, nationwide inflation topped out at 9.1%, the highest level since the Soviet Union began withdrawing its troops from Afghanistan in 1988.

And that was just an average number. Since that 40-year high in June 2022, a peak year of COVID-19, consumers in cities from Tampa to Los Angeles have seen prices on everything from groceries and eating out to rent and used cars soar, a reflection of the stickiness of price increases.

Consumers now think that tariff-fueled inflation is going to be almost as bad as it was during the dark days of the pandemic.

Just over 45% of all goods consumed in the U.S. are imported and subject to tariffs, according to PYMNTS Intelligence calculations based on 2024 data from the Bureau of Economic Analysis and the U.S. Census Bureau. That puts nearly half of the consumer goods economy in the crosshairs.

The White House Monday (May 12) rolled back its 145% levy on Chinese goods to 30% for 90 days, but that may not offer consumers much solace. Trump’s flip-flopping global tariff regime, which hits almost all countries, is marked by frequent pauses and changes that make it tough for goods companies, which plan their imports months in advance, to know what to expect and how to source and price items accordingly.

In any case, simply thinking about paying more at the grocery store or on Amazon can cause people to make inflation a reality. Economists focused on behavioral psychology say stewing over the prospect of pinched pocketbooks can make higher price tags a self-fulfilling prophecy. Shoppers worried about paying more in the future can rush to stockpile in advance, causing higher demand or even shortages that raise prices. Remember the great toilet paper crisis in the early days of the pandemic?

The PYMNTS Intelligence report publishing Wednesday (May 14), “Echoes of Anxiety: Why Today’s Tariff Fears Mirror the Inflation Shock of 2022,” surveyed nearly 3,800 adult consumers between April 23 and May 2. It found an alignment between Americans who are following the ins and outs of Trump’s tariffs and those who say they don’t know much.

Consumers who understand how the new levies work expect to pay 6.6% more on average for goods and services over the next 12 months. Those with a thin grasp or no clue about the unfolding duties see prices jumping 6.8%.

In other words, a pessimistic vibe has set in all around, especially among shoppers who mostly or almost always go for the lowest prices. That group anticipates paying 8.3% more for goods and services.

Consumers aren’t in a bubble. Federal Reserve Chairman Jerome Powell warned Wednesday (May 7) that tariffs could prompt higher inflation, along with slower economic growth and increased unemployment.

The PYMNTS Intelligence report also reveals the cost-cutting steps consumers are taking — an adjustment happening with 8 in 10 shoppers — and what shoppers who mainly buy goods made in the U.S. are anticipating.

Key takeaways:

• U.S. consumers now think tariff-fueled inflation is going to be almost as bad as it was during the dark days of the pandemic.
• Nearly 7% of American consumers expect tariffs to cause prices to jump almost 7% over the next 12 months, roughly two and half times the current inflation rate of 2.4%.
• Pessimism is widespread, regardless of whether a consumer understands the tariffs regime or not.

Read more:

Fed: Consumer Expectations ‘Deteriorate Sharply’ in Wake of Tariffs

The Enterprise Reset: Navigating Tariffs, Supply Chain Shifts and Cost Pressures

How Retail Small Businesses Finance Survival in Uncertain Times

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