US Consumers Cautious but Still ‘Fundamentally Strong’

American consumer spending is still going strong, at least at some retailers.

As The Wall Street Journal (WSJ) reported Sunday (Nov. 23), shoppers continue to flock to where they see value, as shown by strong earnings from the likes of Walmart, Gap and TJX, parent company to T.J. Maxx and Marshalls.

This spending, the report added, signals a healthy holiday shopping season, which many retailers rely on for a huge chunk of yearly sales and profits.

“As we look at our customers and members here in the U.S., they’re still spending,” said John Furner, Walmart’s incoming CEO and head of its U.S. business.

Gap, meanwhile, is seeing growth across all income levels, said CEO Richard Dickson, calling it “encouraging despite widely reported macroeconomic pressure on the low-income consumer.”

The company is selling more of its items at full price, which it anticipates to fuel additional growth during the holiday shopping season.

The report also cited a projection from the National Retail Federation forecasting retail sales in November and December to grow 3.7% to 4.2% compared with the same period in 2024, to $1.01 trillion to $1.02 trillion. That growth would be in line with last year, when sales in the period climbed 4.3% to $976 billion.

“American consumers may be cautious in sentiment, yet remain fundamentally strong and continue to drive U.S. economic activity,” said Matthew Shay, the federation’s CEO.

As PYMNTS wrote last week, much of this strength comes from households with more stable incomes, while those living paycheck to paycheck — many of whom depend on hourly, gig or mixed-income work — have been tightening their budgets.

These patterns are in line with the PYMNTS Intelligence report “Income Instability Is Redefining the Paycheck-to-Paycheck Economy,” which found that two-thirds of American adults live paycheck to paycheck and 42% do so out of necessity, with 60% earning non-salaried income that fuels volatility.

Target’s recent third-quarter 2025 earnings results, released last week, showed the sharpest signs of middle-income strain, the report added, with comparable sales down 2.7%.

The retailer is seeing “continued softness in discretionary categories like home and apparel, partially offset by growth in food and beverage,” Chief Commercial Officer Rick Gomez said during an earnings call last week.

“Target’s guests are stretching budgets, concentrating spending on essentials and seeking discounts across discretionary categories, a pattern consistent with paycheck-to-paycheck households managing volatility,” PYMNTS wrote.