Recent data shows a significant drop in consumer spending, coinciding with fears of tariffs from the U.S. government amidst an otherwise stable economy. This decline is the largest since February 2021, raising concerns about future economic conditions. With inflation cooling, any potential tariffs could lead to increased prices and further affect consumer confidence. Although the Federal Reserve projects a contraction in the economy for early 2023, most analysts still foresee modest growth, albeit at a reduced rate, highlighting an overall cautious outlook among consumers and businesses alike.
Ongoing tariff threats and potential government job cuts are darkening consumer mood, leading to reduced spending and posing risks to an otherwise healthy economy.
Spending declined by 0.2% in January despite rising incomes, hinting at consumer caution amidst growing economic uncertainty.
Economists warn that looming tariffs could push consumer prices higher, despite recent cooling inflation, impacting both consumer behavior and overall economic growth.
Most analysts still expect the economy to expand in Q1, but at a slower pace with estimates adjusted downward to reflect caution.
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