According to the US Census Bureau (Department of Commerce), “Advance estimates of U.S. retail and food services sales for April 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $724.1 billion, up 0.1 percent from the previous month, and up 5.2 percent from April 2024.”
Bloomberg reported on some of the perceived behavioral shifts, “Growth in US retail sales decelerated notably in April, reflecting consumers pulled back spending on cars, sporting goods and other categories of imported goods amid concerns about rising prices from tariffs.” Many media reports reflect this concern regarding tariff-related price increases. It is a plausible claim. Personally I am not as certain regarding the mix of consumer motivations.
It is interesting that spending at food service and drinking places was up 7.8 percent from April 2024. Apparently, many folks were not averse to increased discretionary spending. The red line on the first chart below reflects continued strong grocery store purchases. The very slight decline from the March all-time-high might mostly reflect the increased number of meals eaten out.
April retail inventory numbers (see second chart below) do not suggest significant consumer-facing stockpiling. Even the opposite could be reasonably discerned — at least given the ratio of inventories to sales. Inventories may be fatter upstream. But at the consumer level, April sales were stable and inventories declined.
One usually credible observer headlined, “Retail Sales Muted in April as Front-Loading Fatigue Sets-In.” Entirely possible, but consumer satiation could also be hypothesized. The US is now four years into consumer spending climbing higher. Even without the early post-pandemic bounce, this spending boom has been remarkable. In April 2022 US consumers spent just a bit over 660,000 million dollars. Last month we spent just over 724,000 million dollars (not inflation-adjusted). Since 2022 I have not increased my personal spending by one-tenth (plus). Have you?
Last weekend the United States and China decided on a 90-day pull-back from mutual no-flow tariff rates.
On Tuesday Doug McMillon, chairman and CEO of Walmart explained, “Our short and longer-term opportunities are clear. The immediate challenge is obviously navigating the impact of tariffs here in the US… I want to thank President Trump and Secretary Bessent for the progress made recently. We’re hopeful that it leads to a longer-term agreement between the US and China that would result in even lower tariffs. We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins.” A bit later the CFO added, “There are certain items, certain categories of merchandise that we’re dependent upon to import from other countries, and prices of those things are likely going to go up, and that’s not good for consumers.” Otherwise Walmart was reporting a stellar first quarter.
I perceive a US economy and related consumer behavior with remarkably robust spending habits. Enormous value is being generated. Enormous value is being offered. Enormous value is being exchanged. Somewhere between ten and twenty percent tariff-rates the flow of value will shudder hard and on some product categories basically stop. The higher the percentage, the quicker and more complete the stop. The more stops, the more collateral damage to everyone along the flow network. It is good that the maximum rates have been lowered for the next 90 days. June is not far away. We can see the future from here. The details may still be a bit obscure. New details may yet emerge. But the lay of the land is clear enough (more).
