In April, the United States witnessed a deceleration in retail sales as President Trump's tariffs began affecting consumer behavior. According to data from the Census Bureau, headline retail sales edged up by just 0.1%, slightly surpassing economists' forecasts of no growth but significantly lagging behind March's robust 1.7% increase. The control group, an important indicator for GDP calculations, dropped by 0.2%, contrary to expectations of a modest rise. This slowdown follows a surge in March when consumers accelerated purchases ahead of tariff implementation.
April’s figures reflect adjustments in spending patterns influenced by tariff uncertainties. A notable decline was observed in sporting goods and hobby store sales, which plummeted by 2.5%. Department stores also experienced a dip, with sales falling by 1.4%, while specialized retailers reported a decrease of 2.1%. These declines come after a strong March performance, where retail sales soared due to preemptive buying before the tariffs took effect.
President Trump's recent actions on tariffs have contributed to these shifts. In April, he raised tariffs to their highest levels in over a century, though he paused reciprocal tariffs on most nations except China. Notably, this data precedes the US-China agreement for a 90-day tariff pause earlier this week. While the impact of tariffs is visible in spending trends, broader economic indicators are yet to fully reflect these changes.
Evidence suggests that underlying spending momentum may be slowing. Wholesale inflation readings indicate a drop in "core" producer prices, excluding volatile food and energy sectors, by 0.4% last month. Meanwhile, consumer prices fell to their lowest point in over four years during April. Economists anticipate that tariffs will likely lead to higher costs for American consumers later this year, potentially dampening future spending.
Analysts at Oxford Economics highlight concerns about forthcoming retail weakness. They suggest that spending will soften initially due to prior front-loading activities and subsequently as part of a wider economic response to tariff-induced price hikes. These dynamics underscore the complex interplay between trade policies and consumer behavior in shaping economic outcomes.