The global economy in 2026 is a tale of contrasts, with growth projections hinting at acceleration yet consumer behavior shifting dramatically towards caution and discipline. Global growth is projected to accelerate slightly to 2.7% in 2026, driven by sectors like retail and financial services expanding at a rapid 6.7%. However, this growth is not uniformly felt across all consumers, as underlying uncertainties loom large.
AI investments are fueling business spending, which in turn boosts high-end consumer activity through rising stock prices, but this masks a broader trend of slowing consumer expenditure. Consumer spending is expected to slow overall after an initial modest boost, amid factors like lofty stock valuations and tariff uncertainties that disrupt supply chains and increase costs.
This environment sets the stage for a global shift in how people spend, save, and prioritize their resources. Trade barriers have pushed non-US countries toward more intra-trade agreements, reshaping consumption patterns and highlighting the need for adaptability in an interconnected world. As we delve into the data, it becomes clear that resilience and value-consciousness are becoming the new norms.
The Global Economic Backdrop of 2026
Economic forecasts for 2026 reveal a nuanced picture where growth is unevenly distributed. On one hand, strong labor markets and wage gains in some regions support consumer spending growth of 2.9%, fostering optimism. On the other hand, challenges such as inflation and savings rates constrain expenditure, particularly in Europe where household consumption is only up by 0.5 points.
Key regional variations illustrate this disparity. In India, fast-moving consumer goods have surged by 12.9%, signaling a rise in rural consumption that contrasts with more subdued trends elsewhere. China aims for 4.5% GDP growth through expansionary policies, but a stronger renminbi may tighten conditions, affecting spending power.
The US presents a case of resilience, with real consumption rising by 1.6% in 2026 and 1.8% in 2027. However, tariffs keep prices firm, squeezing low- and middle-income purchasing power and creating a divide. This backdrop underscores why consumers are reevaluating their financial habits, leaning into frugality as a survival strategy.
- India: Fast-moving consumer goods up 12.9%, two-wheeler sales 27%.
- China: Needs 4.5% GDP growth via fiscal policy.
- Europe: Household consumption up 0.5 points, savings rate at 19%.
- US: Real consumption rises 1.6% in 2026, broadening from Q2.
Spending Intentions: A Global Shift Towards Frugality
The AlixPartners 2026 Global Consumer Outlook, based on a survey of over 13,000 consumers across nine countries, reveals a striking trend: planned spending reductions are 18 percentage points net higher than increases. This swing is 60% wider than the prior year, driven by caution, frugality, and financial discipline amid persistent inflation and muted wages.
Consumers are not just cutting back arbitrarily; they are making methodical choices to stretch their budgets further. This shift is evident across demographics and regions, with significant variations that highlight the complexity of global preferences. For instance, while some groups anticipate net spending increases, others are pulling back sharply, reflecting broader economic pressures.
Country-specific data paints a vivid picture of this frugality wave. In China, there has been a reversal from a net increase to an -8 percentage point net reduction, while the US sees cutbacks in areas like eating out and travel. The Middle East stands out with a +5 percentage point net increase, the highest globally, indicating regional resilience.
- China: Reversal to -8 ppt net from +10 ppt.
- US: Cutbacks in eating/drinking out, discretionary retail.
- UK: High experience fatigue, cut restaurants if overpriced.
- France: -33 ppt net, highest decline.
- Italy: -17 ppt, widened 2 ppt.
- DACH region: Continued frugality.
- Middle East: +5 ppt net, global highest.
Demographic insights further enrich this narrative. Younger consumers under 35 are the only group anticipating a net spending increase, showcasing generational optimism. In contrast, those aged 65 and older report a -35 percentage point net reduction, highlighting how age influences financial behavior. High-income households have shifted from planning more spending to a -5 percentage point net reduction, while low-income groups make the largest cuts.
- Under 35: Only group with net spending increase.
- 65+: -35 ppt net reduction.
- High-income: Shift to -5 ppt from planning more.
- Low-income: Largest cuts.
- 18-24: Boost non-food retail.
Resilience and Spending Power Disparities
In the US, consumers are often described as resilient, with spending, wages, and income growing across groups. However, the top third of high-income households drive over 50% of spending, creating a significant disparity. This group benefits from AI-related business investments, which boost their financial stability and allow for prioritized spending on experiences like cruises and concerts.
Despite this resilience, weak spots persist. Inflation boosts nominal spending, masking underlying challenges, and approximately 25% of households live paycheck-to-paycheck. This highlights the gap between those who can afford to indulge in experiences and those struggling to cover essentials. The trend underscores the need for targeted support and smarter financial planning.
Upper-income individuals are faring well, but the broader population faces pressure. Consumers are reprioritizing their budgets, shifting spending across categories rather than making outright cuts. This disciplined approach, often termed buy now, wait longer, reflects a savvy adaptation to economic realities, where every dollar is scrutinized for maximum value.
- Top third high-income households drive >50% of spending.
- 25% households paycheck-to-paycheck.
- Experiences prioritized: cruises, concerts, events.
- Upper-income benefit from AI business spending.
Emerging Trends Shaping Consumer Behavior
Looking ahead to 2026, several key trends are set to reshape consumer markets. Euromonitor identifies four major themes that capture the evolving preferences. The comfort zone trend involves emotionally indulgent spending for satisfaction and identity amid pressures, offering a respite from financial stress. This is complemented by the fiercely unfiltered trend, which emphasizes transparency and inclusion to build trust.
Rewired wellness is another critical trend, with nearly 50% of consumers willing to pay more for validated and personalized products. This premiumisation, driven by diagnostics and data, reflects a growing demand for health-focused and durable goods. Additionally, the next Asian wave sees Chinese brands expanding globally, influencing consumption patterns worldwide.
Other trends include intentional spending and value-conscious behaviors. For example, 74% of consumers switch brands for lower prices, and health, cleanliness, and durability guide their choices. Slowly rising prices, especially for lower-priced options, and adaptations in consumer packaged goods to volatility further define the landscape. Fashion is expected to see low single-digit growth, indicating cautious optimism.
- Comfort Zone: Emotionally indulgent spending for satisfaction.
- Fiercely Unfiltered: Transparency and inclusion for trust.
- Rewired Wellness: Nearly 50% pay more for personalized products.
- Next Asian Wave: Chinese brands expanding globally.
- Intentional spending and value-conscious behaviors.
- 74% switch brands for lower prices.
Navigating the New Normal: Practical Strategies
For consumers facing these shifts, practical strategies can help navigate the new economic reality. Start by creating a detailed budget that prioritizes essentials and identifies areas for cutbacks. Methodical shopping with lists and meal planning can reduce grocery costs, while opting for store brands and discounts adds value. Embrace a buy now, wait longer mindset to avoid impulse purchases.
Businesses can respond by enhancing value propositions and focusing on omnichannel experiences. In non-food retail, improving service and selection can retain customers, while in travel, ensuring safety and end-to-end experiences is key. For eating out, leveraging reviews and recommendations can attract discerning consumers. Fitness brands should emphasize quality service to maintain loyalty.
Leveraging technology, such as AI for personalized offers, can also drive engagement. Consumers should consider saving extra income, as 42% plan to do, and explore ways to boost financial literacy. By staying informed about global trends, both individuals and companies can adapt more effectively, turning challenges into opportunities for growth and resilience.
Ultimately, the shifting preferences and spending power of 2026 call for a proactive approach. Whether through disciplined spending or innovative business models, embracing change can lead to a more sustainable and fulfilling economic future. This era of frugality and resilience is not just about survival but about thriving in a world that demands adaptability and smart choices.
