During February American consumers expended about the same as they did in January (which was slightly less than a high-spending December, see first inflation-adjusted chart below). Last month Americans made a little more, saved a little more, and may have stayed home more (bad weather? ).
On Friday Bloomberg’s PCE report (and others) emphasized:
Notably in February, Americans reduced spending on services for the first time in three years in the face of higher prices — including on dining out. “Consumers are resistant to price increases,” Neil Dutta, head of US economics at Renaissance Macro, said in a note. “Ultimately, inflation boils down to a household’s budget constraint and conditions are deteriorating here.”
According to the Bureau of Economic Analysis’ March 28 update, during February US consumers spent more on non-durable goods, food-at-home, and recreation (NOT inflation-adjusted, see second chart below). Rather than treacherously treading water far from shore, I read this more as languorously floating after a brisk swim along the beach.
Shipping indicators could be skewed by tariff-anticipation, but whatever the cause — a traditional seasonal pause in volumes was less apparent this February. The Cass Index for the month was up. DAT Trendlines — February 2025 versus February 2024 — show (mostly) significant gains. Fast forwarding to late March flash data, FreightWaves tender rejections show stable reefer and dry van capacity calls with surging flatbed demand.
Given all the tariff turmoil (here and here and here), I am poised to perceive demand-destruction too. But I don’t see it yet.
“April is the cruelest month” is the opening line of The Waste Land by T.S. Eliot