Despite President Donald Trump’s trade war, Americans continue to spend, with low unemployment remaining a key driver of consumer confidence. According to recent surveys, consumers remain skittish over the tariffs’ impact on inflation, but businesses have taken steps to mitigate its effects.
Companies have delayed ordering inventories and negotiated partnerships with suppliers to share costs, helping keep inflation at bay. Unemployment remains low at 4.2%, allowing Americans to spend and save. Consumer sentiment has recently fallen, but it hasn’t impacted spending behavior in the past.
The US economy is heavily reliant on consumer spending, which contributes about 70% of economic output. Even with signs of caution, consumers have continued to power the economy through their spending. As long as this trend holds up, corporate profits and stock prices are likely to remain high.
In July, retail sales rose 0.5%, outpacing economists’ expectations. Categories like car dealerships, furniture stores, and gas stations saw significant gains, while online sales jumped during Amazon’s Prime Day sale. Restaurants and bars, however, saw sales decline for the second time in three months.
The resilience of US consumers suggests that their spending habits will continue to drive economic growth, despite ongoing uncertainty about tariffs and inflation. As one economist noted, “what consumers do is more important than what they say.”
Source: https://edition.cnn.com/2025/08/15/economy/us-retail-sales-july