Author name: moderat ereport

I see this constantly remarked upon, so I wanted to check the data. Figure 1: Consumption, 2017$ (bold black, left scale), Services Consumption, 2017$ (tan, left scale), Retail Sales in 1999M12$ (light blue, left scale), all in logs 2025M04=0; U.Mich. Survey of Consumers expectations (red, right scale). Source: BEA, Census, BLS, U.Michigan Survey of Consumers, and author’s calculations. Whether the consumer is surprisingly resilient depends on what one expected consumption to do given determinants (income, expected income, costs, uncertainty, wealth…). Without a full fledged model, I can still observe that real consumption’s trend has changed to flat. Since this series includes durables consumption expenditures — which has been distorted due to front-running tariffs — one can look to services consumption. This variable should be more sensitive to permanent income (in the Hall (1979) sense). Here, the break in trend is apparent as well. Finally, real retail sales have declined since March. With a June observation, we have a more recent reading on the consumer’s behavior — and it’s not indicating a strong resurgence. Consumer expectations have improved, and one would expect something of a rebound in consumption in July. However, expectations have not recovered to anything like November levels (77, compared to July preliminary 59).  

Trump announces tariffs of “only” 15% on Japanese imported goods, and the market jumps. Source: TradingEconomics. Subsequent accounts note the optimism that a deal with the EU will entail tariffs of “only” 15%. Time consider what the effective tariff rate will be, incorporating this “deal” (which is only as good as the virtual paper it’s written on, given Trump’s predilection for fickleness).