Xinhua
08 Jul 2025, 14:45 GMT+10
With policy signals still unclear, consumers are cautious with their spending, casting a shadow over what is usually the economy's sunniest season in the United States.
SACRAMENTO, United States, July 8 (Xinhua) -- Americans may have to think twice before they travel, dine out or shop this summer -- a season typically defined by spending, as tariff concerns weigh on consumer sentiment, multiple surveys have shown.
U.S. President Donald Trump on Monday announced new tariffs ranging from 25 to 40 percent on 14 countries and signed an executive order to extend the pause on "reciprocal tariffs" to Aug. 1.
According to a Yahoo Finance/Marist poll released Monday, 81 percent of the 2,011 adults surveyed said they are concerned to varying degrees about the impact of tariffs on their personal finances, while 60 percent fear the tariffs' negative impact on the broader economy.
Asked where they would cut back first, 48 percent cited entertainment and 45 percent pointed to clothing. Meanwhile, 52 percent said they are already eating out less frequently.
"We're seeing a real-time recalibration of spending habits because of both higher prices and growing uncertainty about what's coming next," the poll said.
Such a trend has begun to show up in retail sales. Core retail sales rose only 0.23 percent in May from April, according to the CNBC/National Retail Federation (NRF) Retail Monitor released on June 13. A month earlier, the same gauge jumped as households rushed to buy imported goods before tariffs took effect.
"The data for May indicates that the pull-forward in consumer demand ahead of tariffs is likely dissipating," said NRF President and CEO Matthew Shay.
Electronics and appliance sales slipped down 1.98 percent month over month in May, echoing the Yahoo Finance/Marist poll that found 34 percent of households chose to postpone big-ticket purchases.
Consumer sentiment indicators underscored the unease. The Conference Board's Consumer Confidence Index for June fell 5.4 points to 93.0 as tariffs and inflation remain on top of consumers' minds.
Economists warned that a prolonged pause in discretionary outlays could reverberate across industries that depend on a seasonal influx of consumers in summer.
Some businesses are already adjusting. Major cinema chains extended "budget Tuesdays" to three days a week, while national grocers promoted store-brand picnic kits.
Rising costs mean retailers have limited room to cut prices without eroding margins, according to Oxford Economics notes dated July 1.
Looking ahead, analysts said if trade negotiators dial back tariff rhetoric or if the Federal Reserve's future rate cuts help keep inflation in check, pent-up demand could revive consumer spending during the back-to-school season.
Conversely, a new round of tariffs, particularly on footwear and apparel, where inventories are thin, might trigger a deeper pullback in spending and widen the gap between necessities and nice-to-haves, they added.
With policy signals still unclear, consumers are cautious with their spending, casting a shadow over what is usually the economy's sunniest season.
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