Why Americans are So Lousy About the Economy? The New Round of Tariffs is Another Reason Why Consumers Are Getting Closer to Their Money
The new round of tariffs is setting the stage for a possible economic downturn, as shoppers are keeping a tight grip on their money.
Personal spending was weaker than expected in February, according to the Commerce Department, with lower spending on discretionary services such as restaurant meals.
People on the political spectrum say they’re worried about their personal finances, unemployment, and inflation due to the president’s policies on tariffs and job cuts. Consumer sentiment fell for the third month in a row in March according to a University of Michigan survey.
I don’t think things are moving in the right direction. I really don’t,” says Dan Fitch, a nurse who works for the Veterans Administration in Portland, Ore. The cost of living has been increased for a while. So adding on tariffs — I don’t see how that positively affects anybody.”
Source: Tariffs are another reason why Americans feel so lousy about the economy
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Fitch says he and his family aren’t traveling as much as they usually do. He stopped paying for haircuts for his two sons.
I bought a pair of clippers and am cutting my kids’ hair. Heck, I might start doing my own, too,” Fitch says. “It can get pretty ugly but it’s worth it for a little more peace of mind where your money is concerned.”
A new CBS News poll finds a majority of Americans think the president is focusing too much attention on tariffs and not enough on lowering prices. Although inflation has fallen since peaking in 2022, consumers are likely to pay even more as a result of the new tariffs.
“I try to stick to a budget and it’s been very hard to stick to a budget,” says Kathy Merkler, a research laboratory coordinator in Tampa, Fla. “I’m paying the same amount of money for fewer bags of groceries.”
Federal cutbacks at the National Institute of Health and the Centers for Disease Control and Prevention have caused Merkler to worry about the scientific job market. She and her husband have debated whether it’s a good time to replace their aging car, a 2015 Kia Soul.
Implications of new tariffs for consumer spending: An economist‘s perspective on the economic effects of the ‘tariffs’
The new tariffs started to go into effect, and other firms were predicting an even higher price increase. Anderson Economic Group concluded that the tariffs could boost manufacturing costs by $4,000 to more than $10,000 per car, depending on the vehicle model. Battery-electric crossover SUVs could see the biggest spike of $12,000.
Consumer spending is the biggest driver of the U.S. economy, and it remained remarkably resilient through the pandemic and the period of high inflation that followed. The consumer engine might be sputtering a bit.
Dan North, a senior economist at Allianz Trade North America, believes that if you’re a consumer you will say “I’m not so sure” about the tariffs. “My income is starting to decrease a bit. I opened my card bill to find that there are still items I need to pay for from Christmas. I’m gonna draw my horns in a little bit.”
The threat of tariffs hasn’t been all bad for spending. Some shoppers raced to buy big-ticket items in February, before most of the import taxes took effect. Spending on durable goods jumped 1.4% during the month. But forecasters say that burst of spending is not likely to last.
Dawn Woodward, a librarian in Michigan, bought her son a new television weeks before his birthday, in an effort to avoid an expected tariff. Woodward is trimming back when it comes to other shopping.
Source: Tariffs are another reason why Americans feel so lousy about the economy
Implications of Pre-Tariff Trump Taxes on American Autonomy: An Empirical Study of the Toyota, Hyundai, and GM Models
The share of income that people save rose last month, its highest level in eight months. It’s another sign of how nervous Americans are as the President tries to make good on his promises.
The effect could be even more pronounced at the lower end of the market, with many of the most affordable vehicles from GM, Ford, Kia, and Hyundai produced outside the US. Affordability is already a huge problem for car buyers, with average transactions for new cars clocking in at $48,118 in January, according to market researcher Edmunds.
Car ownership is a fundamental component of the American dream. We squeezed out transportation, and shrunk the pedestrian spaces to make way for larger vehicles in our communities. Most people in the US want to participate in daily life and are not interested in owning a car.
With prices expected to surge, many people who had been considering a car purchase are crowding into dealerships, trying to take advantage of pre-tariff prices. Consumer experts advise against panic shopping, but most people are not thinking rationally as they watch the news.
Jake Fisher, senior Director of Consumer Reports’ Auto Test Center, cautions against making a hasty decision. In the short term, the value of your trade-in will increase if the tariffs are here to stay.
Some automakers are taking advantage of elevated inventories — the total number of new and used vehicles that dealers have for sale — to offer short-term incentives to panicked shoppers. Ford is offering employee discounts on most models, including the Mustang Mach-E and Maverick, both of which are built in Mexico, to all shoppers through June 2nd, Reuters reports. Ford had an inventory of more than four months in February, compared to an industry average of nearly three months.
The $21 Billion investment in the US was announced by Hyundai to block the effects of the tariffs. And others are taking a more drastic approach. The company said today it was laying off workers at five of its US factories and pausing production at other plants in Canada and Mexico.
Even Tesla, which is run by billionaire best buddy Elon Musk, is exposed to these new tariffs. A list of car part origins published by theNHTSA shows that less than 25% of the company’s parts are from Mexico.
Source: Trump’s tariffs are ‘a debacle of epic proportions’ for the auto industry
A Transportation Editor for the New York Times and City & State, and Article by T.J. DeBohm, J.F. Gustafson, E.L. McConahan, K. S.
is transportation editor with 10+ years of experience who covers EVs, public transportation, and aviation. His work has appeared in The New York Daily News and City & State.