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In an aerial view, Ford Broncos are seen for sale on a lot at a dealership on April 18, 2025, in Austin, Texas.
At car dealerships nationwide, consumers are flocking to purchase new vehicles in anticipation of price increases tied to tariffs. Some buyers are even opting to replace their iPhones ahead of schedule.
However, this surge in spending is not reflected across all consumer sectors. Retailers report that many shoppers are still hesitant to make purchases in light of the tariffs, showing a tendency to postpone spending rather than accelerate it. This sentiment is corroborated by consumer surveys and preliminary data from the Federal Reserve.
According to the Federal Reserve’s latest Beige Book report, consumer spending, excluding the automotive sector, has generally decreased across the country. While some districts saw slight increases in activity, others reported either modest declines or stability since the last report in early March.
Although vehicle sales and some non-durable goods experienced growth—likely spurred by the impending tariff-related price hikes—there was a noted decline in both leisure and business travel, with ongoing uncertainty surrounding international trade policy hampering consumer confidence.
It appears that aside from the major purchases expected to face steep price increases due to tariffs—like automobiles—many consumers are taking a more conservative approach to spending. Corporations, including Chipotle, PepsiCo, and American Airlines, have indicated that they are observing slower consumer spending patterns.
Steve Zurek, vice president of thought leadership at NielsenIQ, described this behavior as a “conservational mentality,” where consumers are closely monitoring their expenditures amid volatile financial conditions. “With the current level of uncertainty, shoppers feel they have limited options besides controlling their household finances,” he remarked.
Support for this hesitancy comes from a recent NielsenIQ survey, which indicated that around 35% of U.S. consumers plan to postpone significant purchases, such as homes or vehicles, due to tariffs. This contrasts sharply with the mere 7% who intend to make substantial purchases now to avoid potential price increases. The survey was conducted shortly before tariffs were implemented, giving insight into consumer anticipations.
Additionally, the National Association of Realtors reported that rising mortgage rates contributed to a decline in home sales, marking the quietest March since 2009.
Businesses across various sectors, including retail, airlines, and automotive, are closely observing consumer behavior as they strategize around inventory and demand. Some have begun to place larger orders for durable goods preemptively to counteract the anticipated tariff increases.
An Upward Trend in Auto Sales
One area of notable activity amid tariff fears is the automotive market.
In March, as motor vehicle sales surged, the overall retail sector recorded a modest increase. Sales in the auto industry rose by 5.3%, whereas sales excluding vehicles increased only 0.5%, according to reports from the Commerce Department. Despite recent easing of certain tariffs, a 25% levy on imported vehicles remains in place.
Many consumers are rushing to dealerships, motivated by potential savings on vehicle purchases. Estimates from Cox Automotive suggest that the 25% tariff could elevate the price of imported vehicles by about $6,000 and increase domestically assembled vehicles’ prices by approximately $3,600 due to rising automotive parts costs. This adds to existing price hikes from earlier steel and aluminum tariffs.
Auto industry executives have reported a marked increase in showroom traffic and sales since tariffs were announced, with Charlie Chesbrough, a senior economist at Cox Automotive, noting, “Questions about escalating vehicle prices due to tariffs triggered a notable boost in sales last month.”
Sales of new vehicles surged significantly in March, running 22% above last year’s pace, with an 8% increase noted through early April. Some dealerships likened the current buying environment to previous frenetic times, such as during the COVID-19 pandemic. “It’s been busy; everyone’s buying now out of fear that prices will rise,” said Craig DeSerf, executive manager at Gulf Coast Chevrolet Buick GMC in Texas.
As beneficial as the surge is for the automotive sector, concerns linger regarding future sales once inventories free from tariffs diminish. Chesbrough expressed that many companies might face challenges if inventory levels continue to drop and consumer confidence wanes.
Surveys indicate that automotive purchases were notably expedited due to tariffs; nearly 12% of respondents revealed they had hastened their car purchases for this reason, followed by close to 10% for furniture and nearly 9% for significant electronics.
Limited Stockpiling Elsewhere
Despite the heightened activity within the auto sector, many other retail categories, such as household items and apparel, lack a similar rush for purchases.
Walmart’s Chief Financial Officer, John David Rainey, stated that the retailer has not experienced a resurgence of bulk buying akin to what was seen during the pandemic, despite some fluctuations in sales patterns. These fluctuations have made consumer spending forecasts unpredictable week-to-week, influenced by various external factors, including weather and changes in consumer sentiment.
Chris Nicholas, CEO of Sam’s Club, corroborated this observation, noting no significant early buying trends in appliances or electronics related to impending tariff increases. The timing of Easter has also complicated sales reviews, with April showing some spending growth attributed to holiday-related shopping.
With April’s spending estimated to have increased by 3.8% compared to March, changes in consumer shopping patterns in relation to seasonal factors are notable. Retailers are anticipating strong sales driven by the Easter holiday without the chaotic buying patterns seen previously.
Current trends suggest that while tariff-related concerns have prompted some consumers to act earlier regarding major purchases, many others are still cautious. The uncertainty continues to influence how consumers approach both everyday items and larger acquisitions, often driving them to seek deals instead of making spontaneous purchases.
Cautious Optimism in the Air Travel Industry
Tariffs have also affected spending habits in the airline sector, with many consumers opting for budget-conscious decisions. Procter & Gamble’s CFO observed a shift toward more cautious consumer attitudes, noting a downturn in retail traffic as shoppers seek value and gravitate toward online and bulk retailers.
Airlines are experiencing declines in domestic bookings, prompting strategies such as fare sales to maintain occupancy rates. Recent federal data revealed a 5.3% drop in airfare in March, following a 4% decrease the month prior. Executives throughout the industry have acknowledged a change in demand dynamics, particularly in segments reliant on economic stability for discretionary travel.
American Airlines and other major carriers have adjusted their financial forecasts, preparing for less predictable revenue streams tied to changing consumer demand. Alaska Airlines, for example, noted that while demand remains good, it is not as strong as anticipated earlier in the year, leading to fare reductions to attract customers.
As retail earnings reports begin to surface in mid-May, analysts predict that consumers will continue to adopt a cautious spending approach, leading to a rise in savings. During the pandemic, many Americans adapted their spending habits, reflecting a broader desire to secure their financial wellness amidst an unpredictable economic landscape.
Dallas resident Tiffany Armstrong exemplifies this cautious approach, planning to delay a kitchen remodel due to unpredictable costs associated with appliances and materials. “With pricing uncertainty and the fluctuating stock market, it doesn’t seem wise to undertake such a significant investment right now,” she remarked. However, she still made an exception for an earlier-than-planned iPhone purchase, only to find out later that these devices were exempted from tariffs.
— CNBC’s Amelia Lucas contributed to this report.
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