Consumer Behavior Amid Tariffs: Buying Now, Stockpiling, or Delaying Purchases

At car dealerships nationwide, consumers are rushing to buy new vehicles ahead of tariff-related price hikes. Some shoppers have also replaced iPhones early. However, when it comes to other items, retailers aren’t seeing widespread stock-ups or huge waves of early purchases due to tariffs — at least not yet. Instead, U.S. shoppers seem hesitant to spend and inclined to delay purchases rather than speed them up, according to consumer surveys by market researchers and early reads from the Federal Reserve.

Consumer spending, excluding autos, was lower overall across the country, according to the Federal Reserve’s latest Beige Book report on economic conditions. Most districts saw moderate to robust sales of vehicles and some nondurable items attributed to “a rush to purchase ahead of tariff-related price increases.” Yet both leisure and business travel were down, and the report noted that “uncertainty around international trade policy was pervasive across [district] reports.”

Early data suggests that tariffs have intensified consumers’ desire to watch their wallets closely as they wait to see how trade policies unfold. Companies from Chipotle to PepsiCo and American Airlines reported slower spending. U.S. shoppers have adopted “a conservation mentality” for their cash as they follow fast-changing headlines and see wild swings in the stock market.

Some survey results indicate that shoppers are delaying major purchases: about 35% of U.S. consumers said they planned to put off a major purchase, such as a home, car, appliance, or furniture because of tariffs. In contrast, only 7% anticipated making a major purchase now to avoid higher prices later.

In tariff fear-buying, one category stands out: cars. The auto sector outperformed the rest of the retail market in March, as sales excluding motor vehicles and parts increased 0.5%, while sales in the auto sector jumped 5.3%. Consumers are rushing to showrooms to try to save thousands of dollars on a new vehicle due to a 25% levy on all imported vehicles.

Higher sales are good for the automotive industry, but there’s concern that sales could come to a halt once automakers and dealers sell out of their tariff-free inventories. Outside of retailers’ aisles, more price-sensitive customers are pulling back on domestic airline bookings. Carriers are turning to fare sales to fill seats on domestic flights and trimming their schedules to shed excess capacity.

Retailers will kick off earnings season and share their latest numbers starting in mid-May. NielsenIQ’s Steve Zurek anticipates that U.S. consumers will spend less and save more in the coming months because of skittishness about the economic outlook and prices.
— new from CNBC

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