Looming tariffs are causing consumers to carefully weigh spending.
Consumers are growing increasingly cautious about their spending due to the Trump administration’s proposed tariffs.
This trend signals broader economic concerns, The Washington Post reported. Economists warn that this shift is affecting Americans across all income levels, including the wealthiest, which could signal early economic turbulence. A slowdown in consumer spending is expected to weigh on economic growth in the first quarter, with many economists now predicting a contraction after a prolonged period of expansion.
Lydia Boussour, an economist at EY-Parthenon, attributed some of the change to external factors, such as the Trump administration’s proposed tariffs.
“We are seeing clear signs that people are being more careful — they’re reluctant to spend on nonessential expenses. They’re worried about inflation and have preemptive anxiety around tariffs,” Boussour said.
In Austin, small business owner and plastic surgeon Johnny Franco has noticed more clients opting for less invasive procedures.
“There’s only so much money to go around for our patients,” Franco told The Washington Post. “A lot of them are breaking up their surgeries. They’re able to save a decent amount of money while still feeling like they’re making progress.”
This trend reflects a larger shift in consumer spending, with individuals seeking more cost-effective ways to fulfill their wants and needs.
“We see that lower-income and younger borrowers are driving those delinquency rates higher — they’ve maxed out,” Grein said.
This financial strain is also impacting small business owners. Victor Yarbrough, co-owner of the first Black-owned bourbon distillery in Kentucky, shared his perspective with CNN. Although his products are well-priced compared to other spirits, he remains aware that he does not provide an essential product.
“We’re very competitively priced, but the reality is, if people don’t have jobs, then they can’t spend,” Yarbrough said. “We’re not a necessity. We’re not [selling] eggs and milk.”
Yarbrough, who co-owns Brough Brothers Distillery, has also witnessed the economic toll on his community. The already-economically depressed area has become even more financially strained, a shift he sees reflected in the increasing number of people visiting a local food pantry.
“There’s a church that has food drives; we’ve seen a lot more people carrying food baskets away each time,” he said. “That’s telling me that for a lot of people — even in an economically depressed area — things are getting worse.”
The ongoing financial struggles serve as a reminder of the delicate balance between consumer confidence and economic health. Only time will tell how much worse the situation will get.
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Source: Black Enterprise
