Egg prices. Brewing tariff wars. Stubborn inflation. Mix these ingredients together and CX professionals must face a slowdown in consumer spending and a threat to customer loyalty.
What about the eggs?
The eggs came first. The price of eggs has become shorthand for the economic uncertainty that is causing anxiety among consumers in the United States. When Donald J. Trump won his second presidential election in November 2024, people said that stubborn inflation, despite having cooled, and the higher price of groceries, especially eggs, was a driving force among voters. They blamed then President Joe Biden and thus Vice President Kamala Harris for economic headwinds. And Trump won votes by promising to bring down the price of eggs on day one in the White House.
Instead, the price of eggs rose significantly in the first months of Trump's second term. In January, the price rose 15.2 percent, and in February 10.4 percent, according to the Consumer Price Index. The increase was a result of continuous inflation and the rise in avian flu, which caused a shortage of eggs.
The egg debacle prompted late-night comedians to joke about hawking eggs as though they were selling illicit drugs and for FOX News to suggest that people buy their own chickens, so they would have their own supply. Some stores even sold "loose" eggs, so people could buy individual eggs rather than an entire dozen because the total cost was too steep. The shortage led to grocery stores limiting the number of eggs people could purchase and restaurant chains like Denny's adding a surcharge for dishes containing eggs.
Emily Metz, president and CEO of the American Egg Board, opted for transparency, a CX strategy, to prepare consumers for what was to come. She told people to expect the prices to remain high as long as avian flu was still out of control.
Recently, the egg problem has taken a positive turn. Prices have dropped because the avian flu outbreak has remained stable and consumer demand has declined. But The New York Times ran a headline, "Egg Prices Have Dropped, Though You May Not Have Noticed."
The New York Times explains that wholesale egg prices, which are what retailers pay to procure eggs, have fallen to a national average of a little more than $4 for a dozen large white eggs, down from a peak of more than $8 in February. Many people will not see the decrease on their own receipts for another few weeks because of the typical four-week shelf life of the item. Of course, cities with competing supermarket chains may see lower prices before those with limited options for groceries.
Still, experts warn that the price of eggs may rise again if there is another outbreak or other economic factors weigh into the market. On March 10, Trump shared on his social media platform Truth Social an article from an ally who told everyone to "shut up about the eggs."
What's happening to consumer confidence?
Eggs may be foreshadowing the cracks in the economy. In the last week, the S&P 500 entered its first correction since October 2023, sliding 10 percent from a recent high. CEOs have expressed the lowest business optimism since the pandemic. Most significantly for CX professionals, consumer confidence dropped to the lowest level since November 2022, according to University of Michigan data.
Consumer sentiment landed at 57.9 in March, indicating a 10.5 percent dip from February and a shift from the Dow Jones consensus estimate of 63.2, according to CNBC.
"Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences,” Joanne Hsu, the survey’s director, has said. “Consumers from all three political affiliations are in agreement that the outlook has weakened since February.”
Sagging consumer sentiment alone does not make a crisis. However, there are other factors worrying economists and business insiders. The Wall Street Journal reminded readers that consumers are setting off flares:
"Particularly worrisome was a decline in the expectations component of the sentiment index, which fell 15 percent. Economists have found that the Michigan expectations index, based on how consumers expect the economy to progress over the next year, can help predict future spending. One danger is that if consumers pull back, consumer-facing businesses will as well, hurting the job market and further weighing on the economy."
What about the tariff war?
In the meantime, Trump is committing to tariffs on key trading partners, including Mexico, Canada, China and Europe. These countries have all promised retribution. Industries that could be most impacted include retail, automobiles and even liquor, wine and beer makers. For example, Trump said he is considering a 200 percent tariff on liquor from the European Union, which would include imported wine, champagne and beer. The EU responded with a proposal for 50 percent levies on whiskey and other goods.
Most experts agree that the additional costs from the tariffs will be passed onto consumers.
"Economists largely expect Trump's new tariffs on goods from China, Canada and Mexico will raise prices for consumers and dampen spending at a time when inflation remains higher than the Federal Reserve's target," according to CNBC.
In fact, inflation expectations for the year ahead jumped to 4.9 percent from 4.3 percent in February, which was the highest reading since 2022, according to WSJ.
CX professionals must brace themselves and prepare customers for the sticker shock they may experience as a result of the tariffs. Sahil Shetty, senior business intelligence analyst at Lowe’s, recently shared a guide on CX Network outlining how to mitigate the negative impact the tariffs may have on the customer experience. The comprehensive column includes strategic recommendations for businesses. Read the article to understand how the tariffs could impact everything from customer spending to the supply chain.
"Tariffs have a significant impact on customer experience, affecting product prices, availability, quality and delivery times. While tariffs aim to protect domestic industries, they can lead to higher prices and reduced satisfaction among consumers," writes Shetty. "Businesses that adopt strategies such as transparent communication, supply chain diversification and product innovation can minimize these adverse effects and preserve customer loyalty."
What is happening to spending?
Some are seeing signs that consumer spending is cooling after keeping the economy afloat through previous inflationary periods. Retail sales fell by 0.5 percent in January, which was the first contraction in nine months, according to Deloitte's State of the US Consumer: February 2025. Discretionary spending intentions remain well below levels of 2021, while consumers are spending more on nondiscretionary categories, according to the same report.
"Overall, I'm planning to spend less simply because prices of basic needs like utilities, eggs, food in general and fresh items have increased. So I'll probably spend a little less on apparel and other things like shoes and maybe less on vacations than I have in the past," said a female Baby Boomer, who responded to a McKinsey inquiry for the report, An update on US consumer sentiment.
In fact, CNBC reported that retail and travel are bracing for a slowdown. Some executives recently shared weaker-than-expected outlooks. Walmart's finance chief John David Rainey told analysts, as reported by CNBC, that the "outlook is somewhat measured" for the rest of the year. United Airlines CEO Scott Kirby recognizes weakness in demand and will retire 21 aircrafts and cut flights to bring down costs. Dollar General CEO Todd Vasos shared a darker picture:
"Our customers continue to report that their financial situation has worsened over the last year, as they have been negatively impacted by ongoing inflation. Many of our customers report they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities."
No one knows for sure what will happen with spending and consumer confidence moving forward. Scott Galloway, podcast host and professor of marketing, joked that guys like him have predicted "nine out of the last three recessions," in an interview with the Bulwark. However, executives in retail and travel have expressed big concerns about consumer spending dipping.
Consumer confidence has dropped. Inflation, especially if tariffs persist, remains a concern. And those egg prices set off the storm that has been brewing for some time. CX professionals across industries must factor this anxiety into their customer experience strategy, and they must plan for the possibility of a bleaker economy, say thought leaders. The risk is that consumers blame businesses for higher prices and customer loyalty wavers. This is a great opportunity to return to basics by consulting CX Network's explainer on customer loyalty. It is the time to double down on CX. First, reckon with the reality:
"Over the last year, companies like United, Walmart and Abercrombie have managed to outperform the S&P 500, even as shoppers reduced discretionary spending, so this change in commentary marks a major shift," according to CNBC. "It's a warning sign that shoppers could be starting to crack, and that even excellent execution is no match for tariff-induced price increases after four years of historic inflation."
Quick links
- The impact of tariffs on CX: Safeguarding customer loyalty and satisfaction
- Customer-centric companies achieve 2x revenue growth, says McKinsey
- Trump versus consumer protection