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In 2025, many Americans are changing how they spend money because of higher prices, new tariffs on imported goods, and uncertainty about government policies. While people still spend on basic needs like food and cleaning supplies, they're cutting back on extras like going out to eat or taking trips. To save money, many families are combining shopping trips into fewer, bigger purchases. Younger generations, like Millennials and Gen Z, are also adjusting—starting their holiday shopping earlier and focusing on affordable, useful gifts instead of expensive or luxury items. These changes show how people are trying to be smarter with their money during tough economic times.

In late 2025, the U.S. economy is facing a tricky situation. Inflation—the general rise in prices—is staying higher than the Federal Reserve wants, even though they recently cut interest rates to help the economy. The Personal Consumption Expenditures (PCE) index, a key measure of inflation, went up to 2.7% in August, while core inflation held at 2.9%. Both numbers are well above the Federal Reserve’s goal of 2%. This shows that inflation is "sticky," meaning it's not going down easily. At the same time, the job market is showing signs of weakness, which is pushing the Fed to consider more rate cuts later this year. The challenge now is finding the right balance between keeping inflation under control and supporting the slowing economy.

In today’s economy, many people are feeling pressure from rising prices and financial uncertainty. At the same time, social media is making it easier than ever to spend money without thinking. Popular apps like TikTok and Instagram are filled with catchy ads, shopping trends, and spending challenges that often lead to impulse buying. This can cause “lifestyle creep,” where people slowly spend more and more just to keep up with what they see online. To fight this, experts recommend value-based spending—taking the time to set clear financial goals, like saving for emergencies or a future move, before getting caught up in digital trends. Some people, like Alyssa Barber, have taken on challenges like a “no-buy year” to reset their habits and focus on what really matters to them.

The Federal Reserve is uncertain about cutting interest rates because the U.S. economy is doing better than expected. In 2025, many people thought the Fed would lower rates to help deal with inflation and high borrowing costs. But strong job numbers and solid GDP growth suggest the economy doesn’t need as much help as previously believed. At the same time, inflation is still around 3%, which is higher than the Fed's goal of 2%. Because of this, the Fed is hesitant to cut rates too quickly, which leaves consumers and investors uncertain about what comes next.