While the Department of Labor defines Labor Day as “an annual celebration of the social and economic achievements of American workers,” consumers are feeling like their hard work is far from being exalted. Instead, it’s being undercut by inflation and tariffs.
That’s according to new data from personal finance platform WalletHub, which recently surveyed 200 American shoppers about their fiscal health and spending habits. While 70 percent of respondents said they’re working harder this year than they did in 2024, more than half (55 percent) believe rising prices resulting from the administration’s tariff regime are “erasing” that effort, in that they’re ending up with less in their bank accounts despite doing more.
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With holiday sales revving up early, consumers copped to scanning sites and stores for promotions as they usually do. But while the majority (59 percent) believe Labor Day sales offer good deals, 57 percent said they don’t have a budget for spending.
Thirty-seven percent said Labor Day sales often cause them to overextend themselves financially, and as a result, 52 percent of respondents said they plan to spend less this holiday weekend than they did last year. According to the survey results, 94 percent believe they’re owed a raise in order to keep up with the mounting cost pressures.
U.S. consumers are worried about more than rising prices at retail—they’re also worried about their livelihoods. Nearly 60 percent said it isn’t easy to find work right now, and notably, a large contingent (40 percent) are afraid that artificial intelligence (AI) will render their positions obsolete and take their jobs.
Federal Reserve chairman Jerome Powell addressed some of these concerns in a speech at a central banking forum in Wyoming last week, validating the strain shoppers are feeling as a result of shifts in the economic landscape.
“Overall, while the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers,” Powell said. “This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”
Concurrently, gross domestic product (GDP) growth has decelerated “notably” during the first half of 2025—to roughly half the pace of growth seen last year. “The decline in growth has largely reflected a slowdown in consumer spending,” Powell said, noting that
higher tariffs have begun to elevate prices in some product categories.
“The effects of tariffs on consumer prices are now clearly visible. We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts,” the Fed chairman observed. “The question that matters for monetary policy is whether these price increases are likely to materially raise the risk of an ongoing inflation problem.”
Powell said the effects of tariff-based inflation could be short-lived—a “one-time shift” in pricing (though that shift won’t happen all at once, as it takes time for tariffs to work their way through supply chains). What’s more, tariff rates and relationships with trading partners are evolving on a near-weekly basis, “potentially prolonging the adjustment process.”
Powell also acknowledged that a “more lasting inflation dynamic” could take hold.
“One possibility is that workers, who see their real incomes decline because of higher prices, demand and get higher wages from employers, setting off adverse wage–price dynamics,” he said, touching on the attitude of many WalletHub survey takers who believe they deserve a raise. However, Powell said that outcome doesn’t appear likely.
“Another possibility is that inflation expectations could move up, dragging actual inflation with them,” he said—a self-fulfilling prophecy of sorts. “Inflation has been above our target for more than four years and remains a prominent concern for households and businesses,” he acknowledged.
“Putting the pieces together, what are the implications for monetary policy? In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation,” Powell said.
