Consumer spending is up big in early April as people buy in anticipation of tariffs

NBC News

23-04-2025

Consumer spending is rising at a faster clip this month as everyday Americans rush to make purchases before President Donald Trump's full tariff plan takes effect, data released Wednesday from JPMorgan shows.
Spending through the first 15 days in April climbed about 3.8% from the same period a year ago, JPMorgan found. Spending in March increased about 2.7% from the comparable month a year ago.
The pickup in spending shouldn't be construed as heralding faster economic growth, however. 'April data may reflect a pullforward of discretionary spending on big-ticket items if consumers tried to lock in lower prices before tariffs went into effect,' JPMorgan analysts led by Richard Shane wrote to clients in a note on Wednesday.
Much of the April gain came from discretionary spending, which rose by 4.3% in the first 15 days year-over-year, versus 2.9% growth in non-discretionary spending.
Psychological impact
JPMorgan's data offers early hard evidence of how Trump's plan for steep tariffs on imports has affected the psyche of American consumers. While Trump placed many of his planned levies on a 90-day pause soon after announcing them, anecdotal reports show Main Street consumers bracing for what many view as a seismic shift in global trade.
To be sure, JPMorgan noted that some of the growth in spending may have also been tied to the Easter holiday, which fell almost three weeks later in 2025 than in 2024. The analysts also pointed to sliding gasoline prices as a possible driver of increased discretionary spending.
Still, the potential for some binge buying before the full effect of Trump's tariff policy is felt has altered the short-term economic outlook for small business owners and policymakers alike.
At first, 'activity might look artificially high ... and then by the summer, might fall off — because people have bought it all,' Austan Goolsbee, president of the Chicago Federal Reserve, recently told CBS in reference to the acceleration of spending by consumers trying to get ahead of tariffs. A temporary bump in spending may lead to a corresponding drop-off in spending during the summer, he said.
Inventory stockpile
Goolsbee also cited evidence of businesses stockpiling inventory to last two to three months and said so-called preemptive purchasing appeared more common among companies than consumers.
Shippers have front-loaded cargo heading to the U.S. to get ahead of any potential increase in taxes as a result of the tariffs, according to CNBC's Supply Chain Survey. Products from China, which face a cumulative tariff rate of 145%, accounted for much of the cargo shippers were sending to the U.S. earlier than planned.
This idea of an expedited spending timeline by consumers is popping up on first-quarter corporate earnings calls, too, as Wall Street analysts study whether demand for products ranging from smartphones to automobiles could fall later.
AT&T finance chief Pascal Desroches said Wednesday that customers have upgraded devices at a faster clip than expected since Trump unveiled his tariff plan.
Capital One CEO Richard Fairbank told analysts on Tuesday that upticks in spending on electronics and cars looked like signs of consumers speeding up purchases before the full tariff plan goes into effect. Ally Financial CEO Michael Rhodes said last week that a pull-forward in used car purchases could account for what he called strong volume recently seen by the auto loan provider.
Capital One and Ally's anecdotes dovetail with data from Cox Automotive, which found U.S. vehicle supply plunging as consumers rushed to purchase.
The historical record shows that an acceleration in spending to beat higher prices later on doesn't amount to much over the long term. For example, Japanese consumers in 1997 rushed to buy before a consumption tax rose to 5%, and again in 2014 and 2015 before the tax climbed to 8% and 10%, respectively. Afterward, however, spending either fell or flat lined, according to a Federal Reserve Bank of Richmond study.