In February, while spending continued to rise, income also increased, leading to a rise in the savings rate and indicating a more cautious approach among Americans. As economic growth slows down, some businesses are reducing their earnings forecasts due to concerns about consumer behavior.

Consumer confidence is declining, resulting in reduced spending among consumers and lowered earnings forecasts by businesses. Personal income saw a significant increase of 0.8% last month, with spending up by 0.4%, contributing to a rise in the savings rate to 4.6%, the highest since June 2024, suggesting a shift towards more careful spending habits.

Consumer activity in the first quarter of 2025 is slowing down as indicated by the latest spending data for February, according to Comerica Bank Chief Economist Bill Adams. While the weak January spending could be attributed to specific factors such as the LA fires and severe weather, the slow recovery in February indicates a more enduring impact on consumer behavior.

Consumer sentiment is on the decline, marked by a drop in the expectations index of the latest consumer confidence survey conducted by The Conference Board. Furthermore, the University of Michigan's consumer sentiment survey reported an 11% decrease in confidence this week, indicating broad pessimism across various demographic and political groups.

Facing economic challenges, companies in various sectors are revising their earnings forecasts in response to tariffs, inflation, and evolving consumer behavior trends. FedEx revised its full-year profit forecast downwards, citing ongoing global economic challenges, inflation pressures, and trade policy uncertainties as contributing factors.

Similarly, Delta Air Lines lowered its first-quarter profit expectations due to decreased consumer and corporate confidence resulting from heightened economic uncertainty. The company's dimmer guidance reflects a decline in domestic demand exacerbated by these factors.