Economy Is Sending Mixed Signals. What Does That Mean For Advertising?

On the heels of new data showing advertising started 2025 with a bounce, new consumer spending data from Morning Consult suggests marketers have reason to keep up their ad spending. January is typically a quiet month, but the survey finds that the average consumer spending grew month-to-month. But the report says the increase came from high-income households, while others pulled back as they faced the pressures of rising inflation.

Morning Consult’s Consumer Health Index shows demand is expected to starting picking up once again in the near term. Based on data showing personal finances and unemployment, its analysts say the index points to rising demand even with the slow start to the year.

What has also gone up is the level the economic uncertainty, with threats of rising tariffs, which could mean higher prices for consumers. Morning Consult says “uncertainty is a looming threat that may cause consumers and businesses to pause on both near- and long-term spending.” The data also shows that households with less than $50,000 in annual income are also particularly vulnerable to changes.

With no major holidays in January, the data shows consumer spending was focused on the basics rather than discretionary items. Households with income above $100,000 were responsible for the increase in spending versus a year ago, and middle-income families — those with income between $50,000 and $100,000 — cut back from the prior year. And lower-income Americans reduced their spending for a third consecutive month. Morning Consult says January is typically a month that sees a pullback after the gift-giving fourth quarter, with winter weather also putting a chill on shopping habits. Americans also faced higher grocery, energy, housing and gas prices.

Retailers, including Walmart, have said sales could be choppy this year. CFO John David Rainey said on a call with analysts last month they are bracing for “uncertainties.” Even so, he said consumers remain “resilient,” even with global economic and geopolitical conditions. “We’re one month into the year, so I think it’s prudent to have an outlook that is somewhat measured,” Rainey said.

How all this plays out for radio remains to be seen. Cumulus Media CFO Frank Lopez-Balboa told analysts last week that the economic mixed signals are giving some advertisers reason to take a cautious approach. “While the sentiment from our discussions with local advertisers in general is constructive in terms of economic activity, there’s still a lot of uncertainty,” he said. During the quarterly earnings call Lopez-Balboa said higher interest rates, for example, have made it tougher for some car dealers to get deals done and that has made the auto category weaker. Yet at the same time financial services, particularly auto insurance, has been stronger as consumer shop around for better deals.

“Pre-COVID, there was a big correlation to our national business and our local business, and they all tended to actually move together,” Lopez-Balboa said. “But we’ve been in an environment, particularly the past couple of years, with uncertainty in the economy, and uncertainty in terms of tariffs more recently, that there’s been a disengaging of that correlation. There’s some sectors on the market that do better and others are doing worse.”