Consumers are worried about trade, and that’s a bad sign for the economy
By Anneken Tappe, CNN Business Updated 1:58 PM ET, Fri August 30, 2019
New York (CNN Business) Americans are growing more concerned about the trade war, and that’s bad news for the economy.
One-in-three consumers is worried about tariffs, according to the University of Michigan’s consumer sentiment index.
These concerns led the August index to log its largest monthly drop since December 2012. The data also undercut consensus forecasts, which came in at 89.8 points, and not the expected 92.1 points. The number is based on a monthly survey of 600 households and their assessment of financial conditions and the economy.
The trade tactics of President Donald Trump, which have included reversals and threats of future tariffs on China and allies over the past months, “act to increase uncertainty and diminish consumer spending at home,” said Richard Curtin, chief economist of the Survey of Consumers.
And trends like this aren’t easily reversed, Curtin warned.
The next round of tariffs on Chinese imports, which will also hit consumer goods, is due to take effect this weekend.
Confident consumers and their healthy spending are an essential part of the US economy. In the second quarter, when GDP growth tapered off, some compared it with the first three months of this year. Consumers were cited as one of the reasons the economy kept roaring on.
If Americans curtail their discretionary spending going forward, the economy would likely take a hit.
Earlier this week, second-quarter GDP growth was revised down to 2% from 2.1%.
Categories: Economic Collapse