Retail industry segments dependent on broad-based or price-sensitive spend are facing weaker outlooks, according to a Tuesday report from Moody’s Ratings analysts. However, credit and debit card payment volume through the end of 2025 shows consumer spending remained healthy.
A growing dependence on higher-income households continues to be of concern, however, as spending growth within the economic cohort outpaced lower-income households who are prioritizing essentials and trading down.
“Companies offering premium products and services attract sustained demand and a concentration of high margin business with more affluent consumers,” the Moody's report said. “Income-linked disparities are now embedded in the US consumption landscape, shaping credit conditions across multiple sectors.”
More recent 2026 spending patterns have continued to demonstrate consumer resilience, with retail sales up in March — but increased gas prices stemming from the war in Iran pose a threat to spending. Retail sales for the month in segments covered by Retail Dive increased 8.4% year over year, with growth spanning most categories.
“Supporting consumer spending is a healthy balance sheet, manageable disposable personal income to debt payments, and wage gains higher than inflation,” Telsey Advisory Group analysts Dana Telsey and Joe Feldman said in a note last week. “However, the outlook for consumer spending could moderate the longer the national average gas price remains above $4.00 per gallon.”
Spending strength has not necessarily matched with diminished consumer confidence trends, which Telsey Advisory Group analysts say they’re monitoring. The labor market saw some strengthening in March, though the housing market has remained under pressure. In March, home goods was the only segment covered by Retail Dive that saw a slight decrease in sales.
“Uncertainty, however, is rising as the long-term effect of the Iran war on the economy is unknown,” the analysts noted.
