Americans aren't spending like they used to, and it's forcing a reckoning for companies from Starbucks to Whirlpool

Companies pushed prices higher and higher over the past few years. Now, people have had enough. Nearly 70% of Americans say they've cut spending.

• American shoppers are spending less, and that's a setback for companies from Nestlé to Southwest.
• People had saved up during the pandemic, but those savings are now depleted.
• Some companies are responding by offering value meals and cutting prices.

Shoppers are slowing down spending on everything from burgers to dishwashers, and that's bad news for a growing number of companies.

Over the past few years, companies as varied as McDonald's, PepsiCo, and UPS have increased prices, helping to push inflation sharply higher. While inflation has since cooled, Americans are still stuck with higher prices for many of the things they buy.

But now they're cutting back — and it's up to companies to cut prices and make other changes to try to win them back.

Shoppers are slowing down food spending — even at grocery stores

The spending slowdown has hit restaurant chains, which have launched new deals to get customers in the door. McDonald's said its $5 value meal had gotten some customers to visit its restaurants after years of increasing prices.

But rivals, including Burger King and Taco Bell, have launched longer-lasting discounts. Some analysts have said that McDonald's $5 meal deal, which was initially scheduled to last one month but has been extended, wasn't enough to boost sales in the long-term.

More discounts could be attractive in this economy, consumer industry analysts at Jefferies wrote in a research note Monday.

"Consumers are choosing to stay at home or look for cheaper alternatives than more expensive sit-down restaurants," the analysts wrote.

Starbucks also reported a decline in visits, which CEO Laxman Narasimhan attributed to "a challenging consumer environment," especially among casual customers.

It's not just coffee breaks that are seeing less demand. Essential products like packaged foods, soap, and dish detergent are also seeing a dip, companies flagged in their latest earnings reports.

Snack maker Mondelez saw shoppers shift their purchases of Oreo cookies and Ritz crackers from supermarkets to discount stores like Walmart, which have a reputation among consumers for offering better value, CEO Dirk Van de Put said during the company's earnings call on Monday.

Food prices aren't rising as much as they did over the last couple of years, but consumers are still feeling the pinch, he said.

"They see the food prices that have increased and they have a feeling of less purchasing power," Van de Put said, adding that Mondelez is planning to offer smaller smaller packs of its products to appeal to lower-income shoppers.

Food prices at grocery stores are up 24% since March 2020, though they've somewhat leveled out in the past year, according to the Bureau of Labor Statistics. And prices at restaurants are up 27% over the same period.

Unilever, which makes Hellman's mayonnaise and Axe body spray, and Nestlé, which makes San Pellegrino sparkling water and KitKat bars, also pointed to low-income shoppers in particular spending less on their brands in North America, echoing remarks earlier this month from PepsiCo.

The spending slowdown is also hitting appliance purchases and travel

It's not just small items like food and household essentials that are seeing the pull-back from price-sensitive shoppers. Bigger purchases are also suffering, too.

Whirlpool reduced its per-share earnings target for the year as it reported second-quarter earnings last week, for instance, citing lower demand for dishwashers and other home appliances due to a cooling housing market.

Southwest Airlines said its revenue metrics would fall more than it previously expected next quarter. While the number of business trips on the airline has grown faster than its capacity this year, there was "choppiness with regards to off-peak times and how much leisure spending is going on" when it comes to vacation travelers, COO Andrew M. Watterson said last week on the company's earnings call.

And UPS said it would cut prices earlier this month as it attempts to attract more customers.

One likely reason this is happening now is that US households have largely used up all of their pandemic-era savings, saving rates are now at historic lows, and workers are receiving fewer (and smaller) pay increases this year.

A Wells Fargo survey earlier this year said nearly 70% of Americans had cut spending — and more than 60% said they had little left for "extras" after paying their monthly bills.

"The data tells us that Americans — no matter who they are — are uncertain about the sustainability of their financial lives," said Michael Liersch, Wells' head of advice and planning.

Over the past two years, income growth has helped consumer spending beat expectations, Jefferies analyst Corey Tarlowe said in a note on Monday. But the recent slowdown could be acting as a drag on sales across industries.

Americans are still spending on experiences

With the sales slowdown affecting purchases of everything from groceries to furniture, there are some things people are still spending money on, the Jefferies consumer team wrote in a separate note Monday.

Americans "are still traveling, heading to sporting events, attending concerts, and playing more golf," the analysts wrote, citing data showing that people are still booking cruise vacations and attending WrestleMania events in record numbers.

Even Starbucks' decline in visits was partially offset by bigger multi-beverage orders from the company's loyalty program, and its new boba-inspired beverages were so popular they ran out.

Meanwhile, value-oriented retailers are doing pretty well.

Walmart continues to report strong sales, not just among low-income shoppers, but increasingly from higher-earners as well; and Costco felt comfortable enough to raise its membership fee for the first time in seven years.

The economy is still humming along nicely, but if consumer brands want to keep it that way, they're going to need to continue getting creative about giving customers more bang for their buck.

Do you work in retail and have a story idea to share? Reach out to these reporters at abitter@businessinsider.com and dreuter@businessinsider.com