The US consumer market is flashing yellow signals, raising concerns about the impact of weakening demand on the economy. Retail spending in May showed a 0.9% decrease versus April, driven largely by a 3.5% monthly decline in sales at motor vehicle and parts dealers. The primary contributor to this decline was the implementation of a 25% tariff on vehicles not assembled in the US, which went into effect on April 3.
Amazon’s announcement that its July Prime Day event has been extended to 96 hours may be an attempt to boost sales, but investors will also be closely watching for any signs of weakening demand. The University of Michigan’s consumer sentiment index rebounded to 60.5 in June, up from the 52.2 in April and May, but still below recent highs.
Rising energy prices are another concern, with energy costs competing with discretionary spending. Investors will be listening to Fed Chair Jerome Powell’s press conference on Wednesday to better understand how the central bank is thinking about the potential impact of weakening consumer demand on inflation. The Fed needs to balance price stability and full employment, and the latest economic projections carry significant market-moving potential.
Despite these concerns, other sectors such as the restaurant industry are showing positive signs, with foot traffic and sales picking up according to UBS. Retailers well-positioned for a potential bounce-back include Amazon, Costco, and TJX Companies, which offer competitive pricing and value propositions that can attract consumers despite economic uncertainty.
Source: https://www.cnbc.com/2025/06/18/is-the-us-consumer-ok-fed-chief-powell-will-soon-be-the-latest-to-weigh-in.html