State of Consumer Sentiment in 2025: Tariffs, Inflation, and Financial Concern

As we step into 2025, consumers across the nation are navigating a dynamic mix of emotions and financial realities. A new presidency has begun, accompanied by promises of major shifts in political and social policies. Divides in information and perspectives persist, and concerns about inflation remain ever-present, among other challenges.

Consumers are a mixed bag: Some report feeling highly positive moving into the new year, while others continue to struggle with anxiety and uncertainty. 

Here’s a deeper look at the key insights shaping the current consumer mindset going into 2025.

Emotional states: A nation split between appreciation and anxiety

Magid surveys thousands of consumers each month, asking them about their mindset and emotional states. At the top of 2025, the most frequently experienced emotion is appreciation, with 41% reporting they feel appreciative regularly. However, anxiety and confidence follow closely at 38% each, highlighting a nation grappling with mixed emotions. 

Political affiliation plays a significant role in these emotional variances:

• Democrats report higher levels of anxiety (42%) compared to 33% of Republicans and 41% of Independents.

Despite this, confidence remains consistent across groups, underscoring a shared sense of resilience amid economic and political challenges.

Inflation: The overarching concern

Inflation remains the number one concern for all Americans. In fact, 79% cite it as their primary worry. This consistency across Republicans (80%), Independents (78%), and Democrats (80%) underscores the universal impact of rising prices on everyday life.

Consumer confidence: Optimism for the future mixed with lingering hesitation

Throughout 2024, consumer attitudes towards finances painted a picture of cautious optimism. Most felt like they were worse-off financially than in 2023, but still felt confident they would fare better in 2025. 

When it comes to actual financial well-being in 2025, the picture is mixed:

• Current financial standing: 30% of consumers report doing better than a year ago, while 41% say their situation remains unchanged, and 28% feel worse off.
• Looking ahead: A notable 53% of consumers expect to be doing better financially a year from now, with optimism varying by political group:
  • Republicans lead with 60% expecting improvement.
  • Democrats (50%) and Independents (47%) express more tempered optimism.
• Business conditions: 39% of consumers believe the country’s business conditions will strengthen over the next 12 months, but confidence splits sharply by political affiliation:
  • Republicans: 57% expect strong conditions.
  • Independents: 33%.
  • Democrats: 24%.
• Major purchases: Hesitation persists, with only 35% of Republicans, 28% of Democrats, and 19% of Independents believing now is a good time to make significant financial commitments.

Financial outlook seems to be largely connected to how consumers think new political and economic policies will affect their wallets. Until those changes become more clear, many remain in a state of financial uncertainty.

The tariff debate: Divided sentiments and economic implications

The proposal of tariffs on foreign nations adds to this overall sense of financial uncertainty. Once again, there are starkly different outlooks based on people’s political affiliations.

• Economic impact: 45% of all consumers believe the tariffs will positively affect the economy, though opinions vary greatly by political affiliation:
  • 70% of Republicans foresee positive outcomes.
  • Only 26% of Democrats and 29% of Independents predict positive outcomes.
• Personal finances: Similarly, 60% of Republicans believe tariffs will positively impact their finances, while only 27% of Democrats and 25% of Independents share this belief.
• Emotional response:
  • Republicans: Hopeful (54%), Confident (45%), Optimistic (44%).
  • Democrats: Concerned (58%), Frustrated (49%), Anxious (43%).
  • Independents: Concerned (43%), Skeptical (36%), Hopeful (33%).

Even though this topic has sparked sharp divides, consumer awareness of the proposed tariffs remains relatively low. Only 50% report being familiar with the tariff proposal and 47% say they understand the potential impact. Once again, the key theme for this year is uncertainty!

Consumers are already adapting their behavior in anticipation of tariff-related changes:

• 74% plan to pay closer attention to brand pricing and promotions.
• 68% intend to support local businesses more actively.
• 64% expect to purchase more domestic products.
• 61% aim to save more money over the next six months.
• 57% plan to reduce their spending on imported goods.
• 57% anticipate delaying large purchases

Navigating 2025’s economic landscape

A few key takeaways emerge from these consumer sentiment insights: finances remain the primary concern for most individuals, emotional states and mindsets are deeply influenced by differing worldviews, and the overall sentiment reflects a complex blend of hope and caution. 

While there is some optimism for the year, the pervasive concerns about inflation and economic policies like tariffs continue to fuel high levels of concern and anxiety, continuing trends observed throughout 2024.

As we move forward, 2025 promises to be a year of change and adaptation. Magid’s ongoing consumer studies will continue to track and analyze shifts in consumer sentiment and mindset as the year unfolds.