What Pinball Tells Us About Spending in the Post-Tariff World

It takes a lot to get most people to agree on anything.

Even members of the same family have a hard time deciding what movie to watch on a Friday night, what to name the new puppy or what color to paint the living room. Getting consensus across an organization to move a new project forward can become painstakingly arduous — that’s quite often why inertia reigns supreme.

There is one thing that nearly everyone agrees on. And that is the importance of protecting their financial interests.

Financial stability represents a fundamental human need. Whether wealthy with diversified investment portfolios or living paycheck to paycheck with financial pressures, individuals understand that safeguarding their money directly impacts their quality of life, future opportunities and sense of security. That’s as true for Gen Zs living their best-connected lives at home and at work as it is for Grandma collecting Social Security and dividends still trying to figure out how to Venmo birthday money to her grandkids.

Financial stability is also a complex calculation that goes beyond dollars and cents sitting in a bank or investment account. It’s about how wealthy people feel when they look at the value of their home, how well their investments are doing and how secure they feel in their jobs. It’s why preserving and growing one’s economic resources remains a common priority, and source of anxiety in uncertain times — regardless of how many zeros and decimal points one’s bank account balances may have.

That’s why financial decisions often come down to the quantitative and qualitative inputs that determine how wealthy any one individual, or household, may feel at any given point in time. Taking into account their income today, their wealth and their well-being in the years to come.

Based on brand-new, unpublished data from PYMNTS Intelligence, the financial confidence of Americans has been shaken severely. And their spending plans, present and future, are starting to show it.

A new report to be released by PYMNTS Intelligence next week finds that the vast majority of consumers, whether they are living paycheck to paycheck or not, are pulling back their spending. They are doing that by buying fewer things or buying cheaper products.

This national study of 2,820 consumers (conducted March 12-31, before the world-shaking announcements of April 2) found Americans already making the connection between tariffs and the economic pain of persistent inflation and a possible recession, even before the full impact of these policies has hit home — and their wallets.

And they’re not waiting around to change their buying and spending patterns.

Nearly 78 percent of both groups across all major retail categories of spend — clothes, food, health and beauty, personal services, household and tech/digital services — are rethinking what they buy and how much they are willing to spend when they do. Tech purchases, eating out and buying coffee at the local coffee shop are consistently on the chopping block, even for those who do not feel financial pressures.

Those living paycheck to paycheck are concerned because higher prices crimp how far their paychecks can or will go. Those not living paycheck to paycheck are pulling back because they want to keep their powder dry, just in case.

Both groups were also probably feeling less wealthy than they did at the start of the year when the stock market took off and so did their 401(k)s. Even before the market meltdown of last week, the month of March 2025 saw the Dow down 4.2% and the S&P down 5.8%, with the market posting its worst month since March of 2022.

Yet even with this pullback, consumers weren’t cutting everything. Some spending is sacred. Kids’ activities top this list — parents will keep paying for soccer equipment, piano lessons and math tutoring even while cutting their own spending. Personal care services that most of us can’t DIY (or shouldn’t attempt) like haircuts and professional beauty services also seem resilient. These patterns show that when consumers tighten their belts, they’re making emotional choices, not just financial ones.

Keep in mind: these pullbacks were all before Liberation Day, which brought tariffs that were more extensive than widely predicted, and before the ensuing stock market crash.

After years studying consumer behavior (especially during COVID), we’ve found consumers are better economic forecasters than even some of the fanciest economic models. During the pandemic, consumer predictions of the durations of the crisis were better than the medical experts. Their spending patterns told the real story all along.

So, if consumers do what they say will do — and have already started to do — with their spending, the simple back-of-the-envelope math predicts a potentially gloomy outcome for the U.S. economy. That’s why many market and economic experts predict slowing economic and anemic GDP growth.

According to Census, U.S. retail spend was roughly $7.4 trillion over the last year, 80% of which can be attributed to consumers. The PYMNTS Intelligence data finds that 78% percent of consumers say they will cut back (buy less or buy cheaper), given the expected economic situation. Even a decrease of 2% in overall spending across that group would amount to a loss of $92 billion every year to the U.S. economy.

If prices increase by 10%, the PYMNTS Intelligence study finds that 18% of consumers say they will simply stop buying those items.

These data were collected before Liberation Day. And assumes that those consumers are still employed with wages that keep pace with inflation. There’s no guarantee of either because companies could cut jobs as demand for their products and services soften, and wages might not keep up with inflation as the job market softens.

A consumer pullback is just one chapter of a very complex global economic story.

According to a forthcoming PYMNTS Intelligence March 2025 Certainty Project Study, 25% of middle market businesses report facing high levels of uncertainty, with a staggering cost equivalent to 6% of their annual revenues.

The ripple effects are tangible: 32% of these businesses say they have or will miss business opportunities due to that uncertainty, 33% faced delays in getting products to market, and 31% experienced client turnover because of their own uncertain business outlooks.

Let that sink in.

That’s roughly a third of U.S. businesses making between $100M to $1B in annual revenue — and the integral bridge between the enterprise and smaller business supply chains — who face some sort of economic uncertainty.

This same study also suggests that those supply chains — having just recovered from pandemic-era disruptions — are likely to face new chaos as businesses absorb the reality of tariffs actually taking effect on every import into the U.S. and higher tariffs on goods imported by 60 important trading partners.

Among middle-market businesses in the consumer and industrial goods industries, an overwhelming 89% expect shortages, delays and higher costs for materials. These businesses are doing the best they can to make lemonade out of tariff lemons, with 26% stockpiling inventory and negotiating with suppliers for better prices before the full effects take hold.

This is coming at the same time as these businesses face growing uncertainties about their own sales and margins, making them ill-positioned to absorb much of those higher costs as Administration officials hypothesize.

According to PYMNTS Intelligence research, the tariff policies that middle market businesses were expecting in March created a further crisis of confidence. Six in 10 expected higher uncertainty and planning challenges as a direct result, while 70% anticipated difficulty exporting due to retaliatory tariffs from trading partners. Overall, 38% of middle-market businesses expected negative impacts from tariffs — a figure that jumps to 53% among those in goods industries, up dramatically from 35% just a month earlier in February.

And this was all before the Trump Administration announced tariffs that were higher, covering more countries and possibly more permanent than were widely expected on Liberation Day.

Just north of Boston lies Laconia, New Hampshire. Laconia is famous for two things. It is right smack in the center of New Hampshire’s Lakes Region, with all four lakes touching some part of its city limits. And it is home to Funspot, the largest Arcade Center in the world, crowned the world’s largest arcade in the 2008 Guinness Book of World Records.

Funspot was established in 1952, and is home to more than 600 arcade games, many from the heyday of pinball machines and arcade games, its owners claim. The arcade industry, globally, is set to reach $21 billion by 2030, despite (and many say in spite of) the shift to video games. After all, who doesn’t love a game of good old-fashioned arcade pinball?

Pinball combines skill and chance. One powerful flip sends a metal ball careening across a field of flashing lights, blaring music and unexpected drops. Players work the flippers to keep the ball in play, building momentum and points until the game ends. No two games — or players — are alike.

Edward Lorenz was an American mathematician and meteorologist and considered the founder of modern chaos theory. His work at MIT was pathbreaking in furthering the world’s collective understanding of complex systems. Those insights have been applied to fields as diverse as weather, biology, computer science and economics.

In his 1993 book The Essence of Chaos, Lorenz uses pinball to illustrate complex systems. He notes that tiny differences in how players launch the ball create completely different outcomes. Though the physics of the game are deterministic, the results seem random due to the presence of these small sensitivities.

Both pinball and economics follow set rules yet defy precise prediction. In the example of tariffs, economists build models to analyze their impacts, but struggle with the same challenge that makes predicting a pinball’s path impossible: compounding and interdependent interactions that magnify even the smallest of initial variations.

A pinball bounces off bumpers and obstacles, each collision altering its path and influencing all future movements. Similarly, tariffs trigger responses throughout the economy — consumers change habits, companies shift supply chains, trading partners retaliate — creating feedback loops that standard economic models can’t capture or anticipate.

This is especially true in real time today, given the uncertainty of how the tariff game is going to play out. Tariffs could be gone by Easter or here through the century — or anything in between.

Today’s consumers, already nervous about spending, are the first bumper in our economic pinball machine. Their pullback creates the initial ricochet that determines how badly tariffs hurt the broader economy.

Our research consistently shows that consumers predict economic trends better than the experts. When they sense trouble — as they clearly do now with tariffs — their changes in behavior become self-fulfilling prophecies. Less spending leads to inventory pileups, less demand, then production slowdowns, then job cuts, then even less consumer spending … and down we go.

The lesson from pinball is clear: in complex systems, you can’t control every bounce once the ball is in play. Tariffs might seem straightforward, but the economic game that follows almost defies prediction. It involves the interaction between dozens of countries, millions of businesses and billions of consumers globally — and their guesses as to what everyone else is going to do.

Consumer spending drives nearly 70% of our economy, making it the most powerful bumper in this economic pinball game. When consumers collectively flinch — as our data shows they already are — the economic ball can careen in wild and dangerous directions.

The $92 billion consumer pullback we’ve calculated, based on the March expectations, is just the first bounce. But if the current tariff situation proceeds as outlined, the direct and indirect effects have the potential to impact every single person and every single business in the world.

And unlike arcade pinball, this economic game affects real families, real jobs and real communities. The stakes couldn’t be higher.

Yet even as economic headwinds gather, there are compelling reasons for optimism — or at least not descent into deep pessimism. Throughout our nation’s history, periods of economic challenge have consistently sparked innovation, adaptation and renewal. Let’s hope there is the collective will to course correct and play through the storm.

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