Big Banks Show Consumers Remained Resilient Heading Into Tariff Turmoil
Americans say they are getting worried about the economy and inflation, but banks say they aren’t acting like it yet.
Bank of America and Citigroup said Tuesday consumer spending ticked higher in the first quarter when concerns about tariffs and the economy began to bubble up. JPMorgan Chase said last week that credit- and debit-card spending rose.
Executives also said spending has largely held up in the weeks after the quarter ended, even after President Trump sharply escalated his tariff threats on “Liberation Day.” JPMorgan noted some of that might have been people making purchases in advance of price increases from tariffs.
“This is consumers continuing to spend, and that is ultimately the basis of the U.S. economy,” said Alastair Borthwick, Bank of America’s chief financial officer, on a call with reporters Tuesday. “The signals at this point from the consumer are that the U.S. economy still remains in good shape.”
I can’t count how many places I’ve seen of people reporting that they are doing exactly this; stocking up now so they don’t pay more later. Billboards advertising “Tariff Free” inventory on everything from cars to washing machines.
IMO, the current buying spree is not a sign of a promising outlook, but rather the exact opposite.
But will the increases in price be due directly to the tariffs being part of the price or will the increases in price be due to the supply dwindling from sellers not willing to pay the tariff and demand rising as a result of product availability?
If enough people have bought in advance now, then there will be a down turn at some point to balance out the advance buying. If sellers see a down turn, then buying with coupled tariffs will probably result in product availability issues. Product availability issues will result in inflation.
Having numbers saying people are still buying at the end of the 1st quarter is not reassuring. Panic buying is never reassuring.
We tend to agree with this …
How we all respond to the current environment depends on how comfortable one is within their own setting.
We don’t believe the sky is falling but we have our rug nailed down as securely as possible in case the time comes when someone attempts to pull it out from under us.
And it’s important to know exactly what products are driving the spree.
Are they discretionary purchases, just for fun, wants? Dining out? Vacations? Hobbies?
Or is it stockpiling needed goods, appliances, products that will be hard to come by in the USA if trade with the country of origin becomes cost-prohibitive?
Personally, I am not reassured that credit based spending rose.
… or you could follow @ASV_Vites and just Bidet it … although in Southern California you might have to choose between your lawn and your tooch if a drought sets in …
On that I can comment. I’m about 10 houses away from a rail line (but enough of a hill/buffer to barely notice the noise while in the house) that handled a LOT of “tar-sands” oil shipments. At one point, estimated 30-40 trains per week of tar-sand oil from Canada (no official stats; government refused to tell local officials who might want to alert fire/safety teams, because terrorists might hear the schedule, as if they didn’t know how to figure it out already).
Lower gas prices dropped it quite a bit. Now traffic is maybe 1/2 or less of what it was 5-6 years ago. I ain’t complaining about that.
Now, if they would just extend the Hudson-Bergen Light Rail line to actually get into Bergen County…
On one of my visits to Hawaii, I spoke to a local who mentioned the oddity of seeing an RV (one was parked nearby). He said something along the lines of “You’re already here; you can drive to the other side of the island, but then what do you do with the other half of the day”.
Makes a lot of sense.
(but sad to know that the Dole “Hospitaltiy House” that I visited 40+ years ago is now gone)
