### Americans Curb Spending Amid Trade War Uncertainty

Americans are tightening their belts as economic unpredictability fueled by the ongoing trade war dampens consumer confidence. New data reveals that buyers are now more reluctant to make big-ticket purchases like cars and clothing, while saving at higher rates as they navigate the turbulent financial landscape.

Consumer spending saw a noticeable slowdown in April, rising only 0.2 percent compared to a 0.7 percent increase in March, according to the Bureau of Economic Analysis. While spending on essential services such as housing, utilities, and health care saw an uptick, expenditure on durable goods like cars and appliances declined sharply. In the same vein, the savings rate climbed to 4.9 percent from March's 4.3 percent.

Economists and market analysts point to the trade war spearheaded by President Donald Trump as a key driver of this behavioral shift. Chris Rupkey, chief economist at Fwdbonds, indicated that "consumers stayed away from the purchase of durable goods… and instead spent mostly on life's necessities."

Evidence of the economic drag extends to the broader market, with consumer spending growth in the first quarter throttling back to 1.2 percent from 4 percent in the previous quarter. Corporate profits took a significant hit as well, plunging by $118 billion—the largest drop since the early phase of the pandemic.

However, broader economic indicators remain relatively stable. The unemployment rate is low at 4.2 percent, and inflation has been easing, with the personal consumption expenditures price index excluding food and energy rising just 2.5 percent year-over-year in April.

Uncertainty remains a significant concern. Robert Blecker from American University highlighted that economic anxiety could potentially trigger broader economic slowdowns. The recent court battles over tariffs continue to contribute to market volatility, impacting consumer confidence.

Businesses are feeling the pinch as well. Ben Hyman, CEO of Revival Rugs, notes a pullback in consumer purchases since mid-February, aligning with the announcement of new tariffs. Companies like EarthQuaker Devices, which face rising costs for components due to tariffs and struggle with overseas sales, have paused expansions and new product development.

Moving forward, the sustained tension between the Trump administration's trade policies and judicial rulings, combined with hesitant consumer spending, holds the potential to significantly impact the U.S. economy's trajectory for the rest of the year.