Consumer confidence just hit an 8-month low. The Conference Board's Expectations Index is approaching recession-warning territory. And yet, November retail sales beat forecasts. Private label sales set another record. Consumers keep buying, even as they tell survey-takers they're nervous about the future.
This disconnect between sentiment and spending defined the week's data. Shoppers are adapting to uncertainty through trade-down behavior, not withdrawal. For retailers and CRE professionals, the signal is clear: where consumers spend matters more than whether they spend.
Consumer Confidence Index
98.3
8-month low
Conference Board, January 2026
Expectations Index
72.9
Near 80 recession threshold
Michigan Sentiment
54.0
+1.1 pts
Still 25% below Jan 2025
November Retail Sales
$735.9B
+0.6% MoM (beat forecasts)
Private Label Sales
$282.8B
Record
+3.3% vs national brands +1.2%
YoY Retail Growth
+3.3%
Census Bureau, Nov 2025
Confidence Falls While Spending Holds (2025)
Consumer Confidence Index
The signal: Consumers report pessimism but keep spending, just on different things. Where the money goes matters more than the sentiment surveys.
Sources: Conference Board, University of Michigan, Census Bureau, PLMA (January 2026)
ECONOMIC PULSE (Week of Jan 22, 2026)
Redbook Index: +5.7% YoY (week ending Jan 13) down from 7.1% prior week
Consumer Confidence: 98.3 (January) 8-month low, expectations at 72.9
Michigan Sentiment: 54.0 (January preliminary) up 1.1 points from December
Food CPI: +3.1% YoY (December), +0.7% monthly
Retail Sales: $735.9B in November (+0.6% MoM, +3.3% YoY)
Sources: FRED, Conference Board, University of Michigan, BLS, Census Bureau
Private Label Hits Another Record
Store-brand products reached $282.8 billion in sales during 2025, according to the Private Label Manufacturers Association. That's a 3.3% increase from 2024, nearly triple the growth rate of national brands (+1.2%). Unit volume rose to 68.7 billion, up 430 million units year-over-year.
The category leaders tell the story. Pet care led with 5.4% unit growth. Liquor followed at 4.4%. Beverages grew 2.3%. These aren't desperation purchases; they're considered choices by consumers who've discovered that store brands often match or exceed national brand quality at lower prices.
The trade-down isn't limited to groceries. Bank of America Institute research found consumers pulled back on big-ticket discretionary items throughout 2025, avoiding furniture, appliances, electronics, hotels, and air travel. The shift went toward smaller purchases: used goods, apparel, and dining out.
Private Label Growth
+3.3%
vs. national brands +1.2%
Store Brand Sales
$282.8B
Record high (2025)
Top Category: Pet Care
+5.4%
Unit growth YoY
The signal: Consumer spending held steady in 2025. The money just moved to different places. Watch retailers with strong private label programs and value positioning.
Sources: Bank of America Institute, PLMA (January 2026)
The Confidence Crater
The Conference Board's Consumer Confidence Index dropped to 98.3 in January, the lowest reading since tariffs were first introduced. More concerning: the Expectations Index fell to 72.9, approaching the 80-point threshold that historically signals recession risk within 12 months.
University of Michigan Sentiment tells a similar story with a twist. The headline number rose to 54.0 (up 1.1 points from December), but that masks divergent trends. Lower-income consumers showed improving sentiment, while higher-income consumers grew more pessimistic. Year-ahead inflation expectations held at 4.2%, well above the 3.3% reading from January 2025.
The trigger is tariff uncertainty. President Trump reversed tariff threats on European countries this week after NATO talks, but not before the EU had voted to suspend trade deal negotiations. The whiplash creates planning challenges for retailers managing global supply chains.
What this means: Watch the Expectations Index. A sustained move below 80 changes the calculus for expansion-stage retailers. For now, the sentiment-spending disconnect suggests consumers are nervous but not frozen.
Tariffs Begin Hitting Retail Prices
The tariff buffer is eroding. Research from the Tax Foundation shows only 14-20% of tariff costs have flowed through to retail prices in the first six months. Businesses absorbed the rest. That absorption is ending.
Morningstar forecasts inflation will rise to 2.7% in 2026 as tariff costs pass through to consumers. The hardest-hit categories: apparel (+8.99 percentage points above pre-tariff trend), coffee and tea (+7.5 points), cameras (+7.5 points), furniture (+6.5 points), and household textiles (+6.2 points).
Birkenstock warned investors this week that tariffs will hurt more in 2026, with plans for selective price hikes, supply chain efficiencies, and Asia-Pacific growth to offset the impact. Food inflation already accelerated to 3.1% annually in December, driven by beef and coffee.
Retail Price Surface
Average retail price increase: +4.9 percentage points above pre-tariff trend. Imported goods +6.0pp, domestic goods +4.3pp.
Businesses absorbed most tariff costs in 2025. That buffer is ending. 2.7% inflation forecast for 2026 as pass-through accelerates.
Hardest Hit Categories (Price Impact vs. Pre-Tariff Trend)
2026 Inflation Forecast
2.7%
Up from 2.5% (tariff impact)
Food CPI (Dec 2025)
+3.1%
YoY, accelerating
Mexico Tariff Rate
25%
On imported goods
The signal: Price increases are coming to shelves in 2026. Retailers with domestic manufacturing, efficient supply chains, or pricing power will fare better. Factor tariff exposure into tenant selection.
Sources: Tax Foundation, Morningstar, Bureau of Labor Statistics (January 2026)
Leadership Reshapes at Major Retailers
The executive musical chairs intensified this week. Lidl US CEO Joel Rampoldt departed after serving since 2023, moving to an advisory role as the discount grocer navigates competitive U.S. expansion. Nike shook up regional leadership, with company veterans Carl Grebert and Angela Dong leaving as CEO Elliott Hill works to improve geographic performance.
Incoming Walmart CEO John Furner promoted four internal executives before officially taking the title on February 1, including David Guggina as the new President and CEO of Walmart U.S. Gap created a Chief Entertainment Officer role, hired Paramount exec Pam Kaufman, and opened offices on Sunset Boulevard. It's a bet on entertainment and culture over traditional retail.
What this means: Leadership changes signal strategic pivots. Nike's regional shake-up suggests international focus. Gap's entertainment hire indicates brand-as-media ambitions. Walmart's internal promotions suggest continuity. Track leadership moves as leading indicators of tenant strategy.
The Expansion-Contraction Divergence
The same week GameStop closed approximately 475 stores across 43 states, Tractor Supply opened its 2,400th location in South Carolina and announced plans for 100 new stores in 2026. Food Lion is adding four stores in the Carolinas during Q1. Uniqlo will debut in Miami and expand in Texas this fall.
The pattern is consistent. Value-focused and specialty formats expand. Mid-tier and legacy formats contract. GameStop employees learned of closures via signs posted on doors. Barnes & Noble used its stores to launch a new chapter, showing that even "dying" formats can revive with the right strategy.
Sephora partnered with Korean retailer Olive Young to bring dedicated K-beauty zones to U.S., Canada, and Asian markets starting in 2026's second half. Macy's Media Network signed on for Amazon's Retail Ad Service pilot, drawing 175 new brands to sponsored products. Format innovation and partnership strategies are reshaping store roles.
What this means: Portfolio optimization requires understanding which side of the expansion-contraction divide tenants occupy. The GameStop vacancies create repositioning opportunities. Track Tractor Supply, Food Lion, and Uniqlo expansion plans for backfill candidates.
Technology Moves: Pop-Up Checkout and Digital Twins
Amazon upgraded its Just Walk Out technology for pop-up retail, making RFID-enabled checkout lanes easier to deploy at festivals and temporary stores. The move targets experiential retail where traditional checkout creates friction.
PepsiCo is using digital twins in a multi-year pilot with NVIDIA and Siemens, creating physics-accurate 3D replicas of U.S. plants and warehouses. The technology allows testing facility changes before implementation, with plans for global expansion.
FedEx and UPS discounts are heating up, but shipping costs still surge according to the TD Cowen/AFS Freight Index. Ground delivery rates hit a record high in Q4, though carriers are making concessions for volume. New cubic surcharge rules starting this month will add measurements to large package assessments.
What this means: Technology investment separates expanding from contracting retailers. Amazon's pop-up checkout enables experimentation without permanent commitment. PepsiCo's digital twins reduce facility modification risk. Shipping cost pressures continue despite competitive discounting.
Looking Ahead
The sentiment-spending disconnect defines this moment. Consumers tell surveys they're worried. Then they buy private label at record rates, trade down from big-ticket items, and keep retail sales positive. The adaptation is happening in real time.
Key dates ahead: Q4 earnings season continues with major retailers reporting. January Consumer Confidence final reading comes end of month. February 11 brings the next CPI release, which will show whether food inflation continues accelerating.
For site selection, the week's data reinforces a simple framework: follow the expansion, not the headlines. Tractor Supply's 100-store plan, Food Lion's Carolina investment, and Uniqlo's Texas debut signal where growth is happening. GameStop's 475 closures signal where it isn't. The divergence keeps getting sharper.