As Income Growth Remains Limited, Consumer Spending Also Declined

According to new economic data, real per capita income recorded an increase of only 0,5 percent in the first quarter of the year. This figure points to a very limited improvement compared to the last periods of 2025. Unfortunately, the strong recovery expected in household incomes does not seem to have materialized. Economic actors carry the concern that this weak income growth will limit the overall economic recovery. This narrow improvement has created a direct and significant cooling effect on consumers' spending habits.

The growth tempo in consumer spending has also realized at almost the same level as this slow increase in income. The tendency of consumers to spend well beyond their income growth, as seen last year, has come to an end in this period. Households have had to manage their budgets with stricter discipline under current economic conditions. People prefer to protect their available resources and avoid unnecessary expenses. This situation causes domestic demand to weaken and general economic activity in the markets to slow down.

Behind this tight picture in consumption and income data lie significant geopolitical and global shocks. In particular, the global shock created by the war in İran has deeply affected economic balances. This crisis environment has created uncertainty across a wide spectrum, from energy prices to supply chains. Countries and consumers are pursuing a more cautious strategy to protect themselves against such unexpected external shocks. This economic attrition triggered by the war has severely shaken households' confidence in the future.

Last year, households provided significant support to economic growth by spending more than their incomes. However, in the first quarter of this year, that brave spending appetite has been replaced by a cautious wait. People now prefer to be financially safer by limiting themselves only to their current income growth. The decline in consumer confidence indices clearly confirms this new and conservative spending approach. This structural change in spending is considered one of the biggest obstacles to economic growth.

How the economic outlook will shape up in the upcoming periods depends on whether this slow momentum in income will be broken. Authorities hope for the resolution of geopolitical tensions such as the İran war, or at least the easing of pressure in financial markets. However, under current conditions, it seems unlikely that this cautious stance of the consumer will change in the short term. Economists warn that this cooling in consumer spending could continue to have an impact throughout the rest of the year. Ultimately, households' instinct to preserve their financial soundness will continue to push market dynamics toward a new normal.