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SPEAKER 3
All right, boys and girls, we have another state of the union of the consumer, and I'm sorry to say not good news. First half of 2025 looking pretty, I wouldn't say grim, I'm trying to find the right languaging for it, but clearly consumers are pulling back. So at the macro data.
0:18
University of Michigan consumer sentiment's down to 57.9%. That's down three months in a row. So people are not super confident about the future. When the Bureau of Labor Statistics looks at two couple of metrics, one is personal consumption expenditure, how much people are spending. That actually went negative minus 0.2 month over month.
0:37
And it was just positive for a number of months in the past. And that savings has almost doubled the disposable, I'm sorry, personal income. The amount that people have has gone up and the amount that they're spending has gone down dramatically, even getting to the negative level.

State Of The (Super)Consumer: Why Government Cuts Are Spooking The Market

And how it impacts companies, consumers, and workers.

Arrrrr! 🏴‍☠️ Welcome to a 💎 free edition 💎 of Category Pirates. Each week, we share radically different ideas to help you design new and different categories.

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Dear Friend, Subscriber, and Category Pirate,

We’re a few months into 2025, and consumers are stashing their treasure—and rethinking every purchase.

Not because of inflation. Not because of interest rates.

But because the government is tightening the purse strings.

Pirate Eddie recently shared his POV on consumer sentiment with the Schwab Network. He explains why government spending is being investigated, audited, and dialed back. Why job losses are hitting government-reliant industries hard. And why consumers are spooked—not by headlines, but by direct exposure to the fallout.

If you’re a Category Designer, you need to understand what this means because the future isn’t being shaped by spending patterns.

It’s being shaped by spending retractions.

In this Jam Session, we break down why consumer sentiment is dropping, how spending patterns are shifting, and what this means for your category strategy.

Here’s what we unpack:

  • Why the University of Michigan’s Consumer Sentiment Index just dropped for the third straight month

  • What it means when spending slows and savings spike—at the exact same time

  • And why companies who mistake this for a temporary pullback will get blindsided by what’s coming next

This isn’t just about what people are buying. It’s about what they believe is safe, smart, and socially acceptable to buy. Because when the government pulls back, consumers follow.

Here’s how to navigate the conversation:

  • 00:37 – Consumer Sentiment Slump: Why confidence is down three months straight

  • 05:20 – Personal Income vs. Spending: Why this is a rare moment where both zig in opposite directions

  • 11:44 – The DOGE Effect: Why anti-government waste sentiment is gaining traction—and affecting business

  • 20:12 – Government Dependency as a Business Risk: Why and entire industries (and companies like Booz Allen) are more exposed than they realize

  • 26:15 – The Bigger Picture: What happens when the era of unchecked government cash ends

We hope this gives you a lens into how consumers feel right now, so you know how your category might be impacted.

Arrrrrr,

Category Pirates 🏴‍☠️

Eddie Yoon

Christopher Lochhead

Katrina Kirsch

P.S. - Where are you seeing changes?

We’re curious—drop a note in the comments and tell us what weird, early signals are popping up in your category. 🎸🏴‍☠️

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