Shrinking wallets, growing challenges – Declining consumption among Generation Z

By: Trademagazin Date: 2025. 06. 27. 10:54

While older generations continue to show a slight increase in purchases, the data shows a dramatic decline among the youngest adults. In the first months of 2025, purchases by 18-24 year-olds in the United States fell 13 percent compared to the previous year, according to a new report from market research firm Circana. The reasons are complex: the economic situation of Generation Z is increasingly uncertain, and this is also a serious warning for the retail sector.

Zoomers, or those born between 1995 and 2009, are digital natives: they have lived online since a young age and use all forms of technology as a natural medium. But young consumers, once known for their energetic, impulsive purchases, are now restraining their spending – in no small part because they have nothing to spend.

Young graduates are finding it harder than before to find jobs, and millions are struggling to repay student loans. According to the New York Fed, credit card delinquencies have already reached their pre-pandemic peak, and are highest among 18-29 year-olds. This financial pressure has also left its mark on consumer habits, with young people primarily abandoning purchases of non-essential products.

The scale of the decline is not negligible. Sales of clothing items fell by 11 percent, technology products by 14 percent, fashion accessories by 18 percent, and small appliances by 18 percent among Gen Z. According to Bank of America, between May 2023 and May 2025, combined spending by Gen Z and millennials fell by 1 percent—an unusual phenomenon for this stage of the young adult life cycle, as consumption needs historically tend to increase during this age.

The market is also feeling the pinch of sales. For example, Thread Wallets, a brand that targets young people with its wallets and accessories, saw online sales fall 29 percent in the first three weeks of June 2025 compared to the same period the previous month. According to the brand’s CFO, young people are now choosing the $16 version over the $30 model.

Although Generation Z accounts for only a small portion of total consumer spending, they are a key target group for retailers. They are seen not only as trendsetters but also as stable customers of the future. It is therefore particularly worrying that more and more of them are being forced to reevaluate their lifestyles and resort to creative survival strategies.

According to a report by the Wall Street Journal, many young graduates are now going to furniture stores instead of coffee shops: there they can sit on a couch, drink a free coffee and, at least for a short time, feel like they are benefiting from a lifestyle they cannot actually afford.