Tariff threats and uncertainty could weigh on consumers, drag down US economy, government report suggests
By CHRISTOPHER RUGABER and ANNE D’INNOCENZIO, AP Business Writers
WASHINGTON (AP) — Ongoing tariff threats from Washington and potentially sweeping government job cuts have darkened consumers’ mood and may be weighing on an otherwise mostly healthy economy.
Data released Friday showed that consumers slashed their spending by the most since February 2021, even as their incomes rose. On a positive note, inflation cooled, but President Donald Trump’s threats to impose large import taxes on Canada, Mexico, and China — the United States’ top trading partners — will likely push prices higher, economists say. Some companies are already planning to raise prices in response.
Americans cut their spending by 0.2% in January from the previous month, the Commerce Department said Friday, likely in part because of unseasonably cold weather. Yet the retreat may be hinting at more caution by consumers amid rising economic uncertainty.
“The roller coaster of news headlines emanating from Washington D.C. is likely going to push businesses to the sidelines for a time and even appears to be impacting consumers,” said Stephen Stanley, chief U.S. economist at Santander, in an email.