Feature: Americans more cautious on spending amid tariffs

The Star

6 hours ago

WASHINGTON, June 25 (Xinhua) -- Mark Reynolds, 48, a marketing professional outside of Washington, D.C., said he and his family used to take a lot of trips once the lockdowns were lifted after the COVID-19 pandemic -- to Asia, Europe and in the United States.
Over the last four years he and his family took about five trips a year. "We've cut that to two trips per year," he told Xinhua.
He has also canceled an expensive gym membership and cut his time with a personal trainer in half, and is now focusing on retirement savings.
Since U.S. President Donald Trump announced sweeping tariffs in April, Americans have become increasingly cautious about opening their wallets.
Consumer spending rose by a sluggish 0.2 percent in April, down from a 0.7 percent rise in the month prior, amid Americans' concerns over how tariffs would impact the economy, according to data released last month by the Bureau of Economic Analysis.
Many Americans seek to increase their savings, after splurging for several years after the pandemic. The personal savings rate rose to 4.9 percent in April from 4.3 percent in March, according to data from the Bureau of Economic Analysis.
Since taking office, Trump has announced a slew of sweeping tariffs, including a general 10 percent duty on all goods coming into the United States. That has caused some products to go up in price.
Gary Clyde Hufbauer, a non-resident senior fellow at the Peterson Institute for International Economics, told Xinhua that he expects Americans to continue making cutbacks.
"Late payment rates on credit cards are high, and many households are buying food on short-term credit, housing sales are weak. All these indicate the financial problems average Americans are facing," Hufbauer said.
Sharon Erdhart, 68, a retiree in the U.S. state of New Jersey, said she shops at cheaper supermarkets even though she has to drive outside of her area a little further.
"I don't dine out anymore because of price increases. I have curtailed my credit card use," she told Xinhua.
U.S. retail sales declined 0.9 percent in May, exceeding the 0.6 percent drop that economists had forecast, according to data released by the U.S. Department of Commerce.
Accounting firm KPMG's recent consumer pulse report showed that in response to tariffs, "50 percent are cutting back on purchases, and 49 percent are actively seeking deals and discounts."
"We're seeing a more selective and cost-conscious summer travel season," said Duleep Rodrigo, KPMG's consumer and retail leader.
Joe Chance, a retired security professional in Philadelphia, told Xinhua he continues to take his family on vacation, but is taking bargain airlines now.
"They don't get movies or anything on board even like meals, but it's cheap," he said.
Meanwhile, discount stores, such as Dollar Tree, Walmart, and TJX Companies -- the firm that owns T.J. Maxx and Marshalls -- have been gaining steam in the retail sector.
Shoppers are opting toward lower prices, and consumers are more likely to seek bargains on goods ranging from beauty products to clothing.
Hufbauer said he expects discount stores to do well in this environment.
Dean Baker, a senior economist at the Center for Economic and Policy Research, told Xinhua: "Wage growth seems to have slowed, so that will slow spending and cause people to look to discount stores."