What discretionary spending says about the American consumer

As economists and market watchers debate whether a full-blown recession is looming or merely simmering under the surface, consumer behavior is already offering important clues. Using new data from eight key consumer categories—including coffee, lipstick, rideshare, and e-commerce—Empower analyzed the early shifts in spending sentiment.

Our findings (see ‘Methodology’) suggest a divergence between staple comforts and fading indulgences—underscoring both inflation fatigue and cautious optimism across the American consumer landscape.

All the spending data and analysis below are sourced from Empower Personal Dashboard™.

E-commerce spending has collapsed

When consumers stop clicking ‘Add to Cart,’ it’s often a sign they’re bracing for something. Once the darling of pandemic-era spending, e-commerce is now the single weakest-performing category in our analysis. E-commerce spending declined 41% year-over-year and 12.1% from January to April 2025 (figure 1). This pullback suggests a significant contraction in impulse buying, fast fashion, and “buy now, think later” consumption. This could reflect growing consumer caution, higher interest rates hitting credit card users, or saturation of online goods.

Small luxuries are back, for now

When big-ticket items go out, self-care sneaks back in. The so-called “lipstick effect”—the idea that consumers turn to small luxuries in hard times—seems to be at play. After a slump in late 2024, beauty spending soared 33% from January to April 2025. Whether this bounce is seasonal, emotional, or cultural, it reveals how emotional resilience often expresses itself through modest indulgence.

Coffee and rideshare hold steady

Despite marginal year-over-year declines, both categories are showing quiet strength. Spending on coffee, an affordable daily habit, increased 2.8% from January to April 2025. Rideshare spending, meanwhile, is up 2.0% during this period—hinting at resumed mobility, nightlife, and possibly a return to hybrid work norms.

Food delivery: A plateau in convenience spending

While Americans may not be reducing spend on food delivery, they aren’t indulging in it more either. Monthly spending on food delivery has shown stability – $162.30 per individual in April 2025, compared to $160.20 in April 2024 and $167.10 in January 2025. This flat trend suggests that Americans are maintaining food delivery as a lifestyle habit, but without increasing their reliance on it. Moreover, this suggests a plateauing of convenience-driven consumption, likely governed by budget constraints and value-seeking behavior.

Gym: Quite rebuild in physical wellness

Gym memberships are emerging as a bellwether of normalized routines and discretionary stability. Monthly gym spending has shown a clear upward trajectory—rising from $72.30 per individual in January 2025 to $74.10 in April 2025, a +2.5% increase. Year-over-year, the April 2025 figure is +20.1% higher than the $61.70 recorded in April 2024.

These gains suggest a steady return to in-person wellness, reflecting consumers’ willingness to invest in physical and mental health. Notably, this category was one of the few to show both strong year-over-year growth and positive short-term momentum—a sign that it is recovering not just from seasonal dips, but also from the pandemic's long-term disruption of fitness habits.

Categories that may be losing steam

Pizza (-2.9% year-over-year): A decline here may point to fewer takeout nights, family budget constraints, or simply tighter dining behavior.

Electronics (-9.1% during January – April 2025): Durable goods appear to be in a “wait-and-watch” phase, as many Americans defer upgrades in the face of rising costs.

Figure 1: Where are Americans holding back and where they’re spending again

Source: Empower Personal Dashboard™.

Reading between the (spending) lines 

If inflation, interest rates, or economic uncertainty were merely abstract threats, consumer behavior wouldn’t shift this fast. The latest data suggest that Americans are:

1. Trimming large or impulsive purchases
2. Seeking comfort in affordable luxuries
3. Sticking to lifestyle habits that bring stability

The divergence across categories also signals greater segmentation of consumer confidence. Some feel secure enough to splurge on a latte or lipstick—while others are cutting back on rides, gadgets, and pizza nights.

Watching the consumer for what comes next

Watching how consumers behave—rather than what they say—may offer the clearest signal of what lies ahead.

Methodology

Empower analyzed spending in eight categories from the Empower Personal Dashboard™ (that included data for over 1 million Americans)—beauty, coffee, e-commerce, electronics, food delivery, gym, pizza, and rideshare—based on their year-over-year performance (April 2025 vs. April 2024) and short-term trendline (January 2025 to April 2025). Categories with strong or recovering spending signal confidence or habit persistence. Weak or declining trends may indicate early consumer pullbacks. The two core percentage change measures analyzed are:

a. Year-over-year % change: Spending in April 2025 was compared to April 2024 to assess longer-term growth or contraction trends across each category.

b. Short-term % change: Spending in April 2025 was compared to January 2025, capturing momentum or softening over the most recent three-month period.