In May, consumer spending on retail and food services fell by 0.9%, signaling a potential slowdown as shoppers reacted to previous tariff-related price increases. The decline was unexpected and broader than just durable goods, encompassing everyday expenditures too. Car sales dropped significantly, reflecting increased dealer inventories amid lower demand. This downturn highlights weakened consumer confidence, compounded by ongoing tariff negotiations and mixed sentiments from President Trump regarding trade, leaving both buyers and investors cautious about future spending behavior.
Consumers tightened their purse strings in May after rushing to beat tariff-fueled price increases in March and April. This resulted in a 0.9% drop in retail and food service sales.
The latest retail sales data is a strong indicator that overseas buying may be slowing as consumers react to trade developments and escalating prices from tariffs.
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