How tariff uncertainty is changing how consumers spend

Tariff uncertainty is creating a surprising trend in retail.

Transcript

00:00I think consumers are very nervous. You see that in the so-called soft data, which is survey-based

00:06indicators of consumption. And they all look terrible, totally inconsistent with the strength

00:11of retail sales. But again, I think the consumers are spending before prices go up as a result of

00:21the tariffs. The problem we have with the tariffs is nobody really knows what the deal is, because

00:26the president is prone to postpone these tariffs, change his mind on some of these things. So we

00:32may see that within 90 days, which is when a lot of the tariffs have been postponed, there might be

00:38deals and all those concerns that prices are going to go up a lot may be misplaced. And that would give

00:43us a better second half of the year. Right now, everybody's expecting higher prices and that the

00:48consumer will go off a cliff in the second half of the year. That's not necessarily going to happen.

00:54And meanwhile, we're seeing energy prices, oil prices are down, gasoline prices are down.

00:59That's a big savings for a lot of us because people do drive a lot and they can save a few

01:05thousand bucks a year. So the consumer is spending, notwithstanding the depressed surveys of consumer

01:13sentiment. And they may surprise us going into the second half of the year. But that assumes that the

01:19tariffs will be negotiated away and we won't get a lot of price increases as a result of them.