Americans are in a funk about the economy — and it’s beginning to take a toll on their spending.
As President Trump rolls out a new round of tariffs, shoppers are keeping a tight grip on their wallets, setting the stage for a possible economic slowdown.
Personal spending was weaker than expected in February, according to the Commerce Department , with lower spending on discretionary services such as restaurant meals.
And people across the political spectrum say they’re worried about their personal finances, unemployment and inflation, suggesting the president’s policies on tariffs and government job cuts are partly to blame. A survey by the University of Michigan found consumer sentiment fell in March for the third month in a row.
“I don’t see things moving in a positive direction. I really don’t,” says Dan Fitch, a nurse who works for the Veterans Administration in Portland, Ore. “The cost of living has already been elevated for a while. So adding on tariffs — I don’t see how that positively affects anybody.”
Fitch says he and his family aren’t traveling as much as they usually do. And he’s even stopped paying for haircuts for his 3-year and 7-year-old sons.
“I bought a pair of clippers and I’m cutting both my kids’ hair now. Heck, I might start doing my own, too,” Fitch says. “It can get pretty ugly but it’s worth it for a little more peace of mind where your money is concerned.”
Americans would like lower prices
A new CBS News poll finds a majority of Americans think the president is focusing too much attention on tariffs and not enough on lowering prices. Although inflation has fallen substantially since peaking in 2022, consumer prices are still high — and are likely to climb even higher as tariffs take effect.
“I try to stick to a budget and it’s been very hard to stick to a budget,” says Kathy Merkler, a research laboratory coordinator in Tampa, Fla. “I’m paying the same amount of money for fewer bags of groceries.”
Merkler is also concerned about the scientific job market, given the federal cutbacks at the National Institutes of Health and the Centers for Disease Control and Prevention. She and her husband have debated whether it’s a good time to replace their aging car, a 2015 Kia Soul.
“Even though it’s on its second engine and it’s got at least 225,000 miles on it, it’s still a good car,” Merkler says.
The 25% tariff Trump has ordered on imported cars and car parts is expected to add thousands of dollars to the price of a new car while driving up used car prices as well.
An engine of growth could be stalling
Consumer spending is the biggest driver of the U.S. economy, and it remained remarkably resilient through the pandemic and the period of high inflation that followed. But now that consumer engine may be sputtering a bit.
“I think if you’re a consumer, you’re sitting there and saying, 'Ugh, I’m not so sure about these tariffs here,' ” says Dan North, a senior economist at Allianz Trade North America. “My income is kind of dwindling a little bit. Oh, and by the way, I just opened up my credit card bill and there’s still items I need to pay off from Christmas. I’m gonna draw my horns in a little bit.”
The recent gyrations in the stock market also may have rattled people’s nerves, leaving them less eager to spend. The S&P 500 index has fallen more than 5% since Trump took office in January.
The threat of tariffs hasn’t been all bad for spending. Some shoppers raced to buy big-ticket items in February, before most of the import taxes took effect. Spending on durable goods jumped 1.4% during the month. But forecasters say that burst of spending is not likely to last.
Dawn Woodward, a librarian in Michigan, bought her son a new television weeks before his birthday, in an effort to avoid an expected tariff. When it comes to other shopping, though, Woodward is trying to cut back.
“I found that stuff that I thought that I needed — 'Oh my gosh, I need this or I need that’ — I didn’t actually need most of it,” she says.
Instead of buying stuff, Woodward is putting more money aside in a her family’s emergency fund. And she’s not alone.
The share of income that people sock away in savings rose to 4.6% last month — its highest level in eight months. It’s another sign of how wary Americans are feeling as President Trump doubles down on tariffs.
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