Consumer spending is holding up as tariff impacts have yet to hit wallets. Morning Consult chief economist John Leer explains why shoppers haven't changed behavior despite rising trade tensions.
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Hey John. I you know, uh it's amazing what a difference a week makes in terms of trade talks and negotiations. It looks really constructive. But my question for you is, how do we factor in the the chance that these trade talks could fall apart just as quickly as they came together? And at what point does the consumer just get fatigued and change their behavior permanently because of that? They don't know when it's gonna happen. I mean, how do you, how do you calculate for that?
I mean, it's a great question. I think thus far, what we've seen from consumers is some reticence to dramatically change their behaviors in response to trade negotiations, tariff negotiations, right? Because announcing 145% tariff uh on Chinese-made goods is not the same as in fact, paying 145% more the next day. Companies have ways of working around things. We also know from our our small business survey that we run with the Boston Fed that small businesses were very reluctant to immediately pass on those elevated costs that were gonna do so over a period of two plus years. So I think from the perspective of consumers, they're sitting back and they're saying, well what does this mean for me and my pocketbook? Um the the expectations of tariffs, I think wrongfully were over uh, you know, I think people wrongfully thought tariff announcements and tariff expectations were immediately gonna affect consumer's pocketbooks. That didn't happen, and so we've got some breathing room right now. And I expect consumers to go back uh and spend.
