Consumers continue to spend despite economic worries: Here's why

March retail sales hit a two-year high.

Transcript

00:00Well, the retail sales report that came out for March was in line with our expectations.

00:06We were expecting a strong number for March.

00:10We didn't expect to see there'd be a strong upward revision in February as well, but we

00:15attributed a lot of the weakness in January and even in February to the weather.

00:20And so we were expecting, you know, in the spring there would be growth and there was.

00:25So the consumer is still spending.

00:28Some of that strength is related to people scrambling to buy cars before the tariffs

00:34lead to higher car prices.

00:36And that may continue for another couple of months.

00:39And then the risk of things will slow down on the consumer side.

00:42I think despite the weakness in consumer sentiment, you know, when you ask consumers how they

00:47feel about things, they tell you they're pretty depressed.

00:50They're worried about the tariffs having an impact on rising prices.

00:54They're worrying that they might lose their jobs.

00:57So they've got a lot of worries.

00:58And yet, despite all that, retail sales in March was very strong.

01:04And they're spending a kind of, well, they're definitely spending on autos, trying to get

01:08ahead of price increases in autos.

01:10But they're also spending on health care.

01:13They're spending a lot on services, on health care services.

01:16They're still traveling more so overseas than domestically.

01:20They're definitely spending on health care.

01:23And that industry has continued to grow.

01:26I think that we're seeing some slowdown maybe in leisure and hospitality, hotels and motels

01:32in the United States, maybe not in foreign travel.

01:36But of course, what we want is we want consumers to spend more in the U.S.

01:41So there could be some slowdown overall in consumer spending as we get into the summer, into the

01:48fall.

01:48But again, much will depend on the course of tariff negotiations.

01:53Over the past three years, there was a lot of talk that consumers were going to retrench

01:58because the Federal Reserve was raising interest rates.

02:01And that really didn't happen.

02:03The consumers actually remained remarkably resilient.

02:06Of course, the consumers are very dependent on the job market.

02:10And the job market remained remarkably resilient.

02:13That's partly because there's actually a shortage of workers in the United States, especially

02:17skilled workers, and especially now that we've got a closed border.

02:21And as a result of that, consumers have jobs.

02:25They're not losing them at this point.

02:26And I think as long as the job market stays relatively robust, I think the consumers will

02:33spend even if they're not feeling particularly happy about things.