The Cutback Economy Spares Pets, Streaming and Dinner Out

Gas hit $4.56 a gallon heading into Memorial Day weekend. That was up more than $1.50 from where it was before the Iran war in late February.

No surprise then that inflation in the United States clocked in at 3.8% in April, its highest level in nearly three years. A 28% year-over-year spike in gasoline and a 54% surge in fuel oil pushed it there.

The U.S. Department of Agriculture (USDA) now expects food-at-home prices to rise 3.2% this year, nearly double what it projected in January. Companies that absorbed tariff costs through most of 2025 are now passing them along to consumers. A survey found that 34% of large firms are already doing it, with 55% of executives expecting prices to jump at least 15% over the next six months.

More than 1 in 3 U.S. consumers entered 2026 pulling back on spending, according to a PYMNTS Intelligence survey of 2,283 U.S. adults. For the roughly 89 million adults who qualify as Pressure-Driven Cutback Consumers, the ones whose spending and savings both fell last quarter, financial life has stopped being about getting ahead. It’s about holding on.

But here’s the plot twist. Even when things are this tough, people in the Cutback Economy aren’t giving up everything. They’re making choices, and what they choose to keep tells a more interesting story than what they let go.

Entertainment and Dining Out Survive

Among Pressure-Driven Cutback Consumers facing daily living pressure, 73% didn’t flag entertainment as a challenge. That means they most likely kept it. The survey found that 59% held onto dining out and food delivery, while 71% held onto pet care.

These aren’t small numbers. They go against the easy assumption that people under financial pressure just slash everything that isn’t a necessity. They don’t. They cut strategically. The streaming subscription survives. The Friday night out survives. The dog gets fed. What gets dropped is clothing, personal care and purchases that can be put off without changing the rhythm of daily life. Or the small moments that make it enjoyable.

The pattern held across all four generations, although the grip varied. Baby boomers in this group held onto entertainment at 84%. Generation Z held on at 56%, still a majority but a softer hold. Dining out followed a similar gradient at 65% for boomers and 51% for Gen Z. Young consumers under pressure give up restaurants and personal care more easily. Older consumers protect those categories longer.

What They Give Up Instead

The things that did get cut tell the other side of the story. Savings took the biggest hit. The survey revealed that 45% of Pressure-Driven Cutback Consumers saved less than the prior quarter, compared to just 16% of Selective Cutback Consumers, the 45% of the population whose spending held flat or grew.

The reasons behind those savings declines varied by age. Among baby boomers in the Pressure-Driven group who saved less, 68% pointed to higher regular expenses. Their grocery bills kept climbing on a largely fixed income as fuel and fertilizer costs worked their way to the shelf. Among Gen Z in the same group, 48% pointed to income loss. Same outcome, different root cause.

Daily living expenses were where the pressure showed up most. Nearly all baby boomers in the Pressure-Driven group, 94%, flagged groceries as a problem. But groceries weren’t where the real divide appeared. In the next tier down, 39% of Pressure-Driven boomers flagged clothing and personal care as a challenge, compared to just 20% of Selective Cutback boomers.

The essentials are squeezing out everything that can wait. With some economists warning grocery inflation could reach 4% to 4.5% by year-end, that squeeze is only going to get tighter.

The Tool Kit Is Too Narrow

The survey showed that 66% of consumers facing cost-of-living challenges said they cut everyday spending, up four points since October. Meanwhile, 51% avoided big purchases. Those two moves accounted for most of the coping activity. Everything else, including negotiating bills, adding income and using buy now, pay later (BNPL), sat below 30%.

For Pressure-Driven Cutback Consumers, it was even narrower. The survey found that 79% cut everyday spending, and 62% avoided big purchases. Only 9% negotiated a bill, and only 8% used installment plans. They rated their coping effectiveness at 2.1 out of 10. With diesel prices up nearly 50% since the Iran war started, pushing commercial transportation, agriculture and manufacturing costs higher, the pressure behind those numbers is only growing.

Why This Matters Now

PYMNTS Intelligence collected this data in late March and early April, before gas crossed $4.50 nationally, before the full impact of the April inflation numbers was felt, and before the latest round of corporate price increases reached shelves. The survey captured consumers already making hard trade-offs. With prices now rising faster than wages (3.8% versus 3.6%), the pressure that produced these choices is speeding up, not slowing down.

But the story here isn’t just about belt-tightening. It’s about what people decided was still worth paying for when they couldn’t afford everything else. Entertainment. A night out. The pet. Even in the Cutback Economy, consumers are protecting the things that make daily life feel like more than just getting by. The forces making those choices harder are far from over.

Read more:

Cutting Back Isn’t Working: Why Doing More, Not Less, Is the Only Strategy That Helps

Inflation Hits Every Generation. But Not in the Same Place.