American consumers have begun to limit purchases, and this is definitely a worrying signal for the economy, writes ARD. American companies had prudently accumulated sufficient reserves of foreign goods even before Trump's new tariffs came into effect.
The problem with tariffs
But warehouses are empty in the meantime, and new imports are associated with significantly higher costs. The company for the production and sale of more expensive youth clothing Abercrombie & Fitch, which owns the Hollister brand, reports, for example, that imports of new clothing are costing it $90 million in additional tariffs this year.
“Tariffs don't just change imports and exports,“ says Samuel Kortham, an economist at Yale University, quoted by German public media. “The US government deficit is falling, but because prices are rising faster than demand, the economic losses are being borne by American consumers.“
Shopping and holiday season
The traditional shopping and holiday season is coming to the US - from this Thursday with Thanksgiving until New Year's. Family celebrations coincide with the days of big promotions, which are also a great time to shop as a family.
Millions of employees will take the day off on “Black Friday“ to line up with their children in front of computer and clothing stores. Retailers across the country are luring with special discounts and new product lines. At the same time, online shopping is also in full swing – in companies between New York and Los Angeles, employees often spend a large part of their working hours searching for bargains on their computers, ARD reports.
Data from the analytical company “The Conference Board“ shows that private consumption is stimulated mostly by people with high-paying jobs. The broad masses in the US are now refraining from expensive purchases.
The mood is gloomy
Due to the disputes over the state budget in the fall, there was a lack of funds for the salaries of civil servants. For six weeks, 1.4 million employees of state departments did not receive their salaries at all, the German public media recalls. The shutdown of these institutions also reflected the mood in the country. Many of the affected employees will need a long time to compensate for the economic losses from the period in which they did not receive a salary.
There are no official data on the losses during this period. The state Bureau of Economic Analysis has not made any new estimates of consumer behavior and inflation - observers can only rely on data from individual companies and surveys.
Fashion company Abercrombie & Fitch has so far recorded a seven percent increase in turnover, but does not expect a further increase in demand at Christmas. Electronics retailer Best Buy expects only one percent growth for the quarter. And with 2.8 percent inflation, this means a real decline, notes ARD.
Consumer optimism is low
At the end of October, “The Conference Board“ took a pessimistic view of the future - from an already low level, Americans' expectations had fallen even further.
The predictions from the index, with which economists from the University of Michigan measure consumer sentiment, are similar. The latest decline they registered was still within the margin of error, but there is no room for optimism, notes the German public media. “Consumers continue to be frustrated by persistently high prices and falling incomes“, summarizes Joan Hsu of the University of Michigan.
Low demand from broad segments of the population is throwing retail companies into crisis. The Dow Jones data is calculated on the basis of the stock market returns of 81 large companies that offer consumer goods and services. The fact that the index has fallen significantly just before Christmas this year is unusual - so far it has grown by only one percent compared to last year.
Author: Ingo Natusius ARD