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11 June 2026 / Article
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Copy LinkConsumer spending, the primary engine of U.S. economic growth since the pandemic, is showing increasing signs of fatigue as higher inflation and elevated energy costs erode household purchasing power. Recent declines in real disposable income, weaker inflation-adjusted retail sales, and subdued consumer confidence suggest that growth momentum is slowing even as labor market conditions remain resilient. The war in the Middle East has amplified these pressures through higher oil prices and broader supply-chain effects, reinforcing our expectation that economic growth will moderate in 2026. Before the start of the war, consumers were already under pressure as 2025 tariffs continued to pass through into retail prices and wage growth normalized from elevated post-pandemic rates. Real consumer spending has slowed materially, as recent data suggest that inflation-adjusted income growth is falling. An additional tax in the form of higher gasoline prices is likely to intensify these pressures. As fuel expenditures are difficult to reduce in the short run, households typically respond by cutting back on discretionary spending elsewhere.U.S. Outlook: Growth Shifts Gears from Consumers to Investment
Even if diplomacy regarding the conflict in the Middle East prevails, the negative economic ripple effects from the shock are already in motion. As a clear resolution to the conflict remains uncertain and likely to follow a non-linear path, a prolonged stalemate may be the most likely outcome. Against this backdrop, disruptions affecting the Strait of Hormuz will continue to weigh on global trade and economic activity while keeping energy markets vulnerable to renewed volatility.
The Conference Board therefore continues to forecast higher inflation and slower growth. Higher inflation will divert limited household resources toward energy and other affected goods and services, weighing on real consumer spending.
Consumers have been the primary driver of economic growth throughout the post-pandemic expansion. However, recent data suggest AI-related capital expenditures increasingly emerge as a key source of economic growth. Firms across a wide range of industries are ac
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