Americans are adjusting their spending habits as tariffs imposed by the Trump administration impact the economy. Following Donald Trump’s election win, some individuals like Amber Walliser initially splurged on items expecting price increases due to new import taxes. However, concerns about job security and a potential economic downturn have led many families to tighten their budgets. The Walliser family, for instance, has postponed plans for a new car, a big vacation, and even trying for a second child, opting instead to save as much as possible.
The uncertainty is echoed across the US, affecting the stock market and businesses. This scenario complicates the Federal Reserve’s task of managing interest rates to maintain price and employment stability. Analysts expect the Fed to keep interest rates unchanged, but tariffs could both raise prices and slow economic growth.
Households are reacting to this uncertainty by cutting expenses. Dave Gold, whose investments were hit in a recent stock market sell-off, has slashed his spending by canceling subscriptions and reducing travel. Retail sales have also fallen, with firms like Walmart and Delta Air Lines reporting reduced demand. Job growth has slowed, and the stock market is at its lowest since September.
Consumer sentiment surveys indicate rising concerns about the job market and inflation, which are troubling signs given that consumer spending accounts for roughly two-thirds of the economy. White House officials acknowledge potential short-term disruptions but promise long-term gains. Public polls show increasing concern over Trump’s economic handling, especially among independents and Republicans.
— news from BBC.com