Consumer Spending Accelerated In March
Consumer spending in March exceeded expectations, with retail sales rising 1.4% month-over-month, marking the biggest gain since January 2023—despite declining consumer sentiment. The strength was seen across multiple sectors, especially in auto sales, which surged 5.3% as consumers anticipated higher prices due to looming tariffs. Other notable gains included increases in sporting goods, building materials, and restaurants, while gasoline sales declined due to lower prices. Despite the strong spending data, market reaction was muted, and consumer sentiment remains low amid fears of a weakening economy and inflation.
U.K. Retailers Raise Concerns
British retailers are warning that Chinese companies may flood the U.K. market with low-cost goods as U.S. tariffs limit their access to American consumers. The British Retail Consortium and industry leaders fear that products from firms like Shein and Temu could be redirected to Europe, undercutting local retailers and pressuring prices, particularly for discount chains. Calls are growing for the U.K. government to review its own import tax exemption to prevent an unfair advantage for overseas sellers. However, analysts note that rising costs for Chinese exporters, including new U.S. import duties, may force them to raise prices globally, potentially limiting the impact.
Powell Warns of Economic Uncertainty
Federal Reserve Chair Jerome Powell said the Fed will wait for more data before adjusting interest rates but warned that President Trump’s tariff policies could push inflation and employment further from the Fed’s targets. Powell described recent market volatility as a reasonable response to the administration’s unpredictable trade moves, not a crisis requiring Fed action. He emphasized the Fed’s independence and reiterated that monetary policy would be based on economic data, not politics. While the economy remains in a “solid position,” Powell acknowledged slowing growth and rising uncertainty, with tariffs likely to temporarily increase inflation and influence future rate decisions.
