Sales of retail goods and food services dropped 0.3 percent last month as consumers tightened their belts. Lower rates of consumer spending will often precede an economic recession.
It was bound to happen. After all, the consumer cannot prop up the economy forever. Although it was recently reported that consumer sentiment was high even when business sentiment is low, spending in the month of September dropped.
In spite of the trade war and tariffs driving up prices, the latest evidence that the American consumer is unaware that a recession could be on the way is the University of Michigan’s consumer sentiment survey released Friday. Consumer sentiment rose to a three-month high of 96, beating consensus expectations and remaining near record levels. Even as economic growth abates and business investment and confidence have faltered in the face of an ongoing United States-China trade dispute, the U.S. consumer has continued to spend money and reflect confidence in sentiment surveys. –SHTFplan
A 0.3% drop may not seem like much, but when 70& of the U.S. economy revolves around consumerism, it can be a pretty big deal. According to the Hill, it is entirely possible that things are on a downward trajectory. While the U.S. economy has held steady amid global turmoil, it has grown and added jobs at a slower rate throughout 2019. Rising trade tensions and fading foreign demand for American goods have also stunted U.S. business investment, manufacturing activity, and exports.
Throwing another wrench in the machine is President Donald Trump’s additional tariffs. Trump is set to impose tariffs on $160 billion in Chinese-made consumer goods by December 15, raising costs on articles of clothing, shoes, toys, electronics and other crucial imports. These tariffs will pose the most direct economic threat to consumers from Trump’s trade war with China.
This could be a huge problem for Trump. His reelection depends on the economy and the health of consumers’ wallets. If people start to feel the pinch, his relection chances will drop dramatically.