Consumers Did Not Front-Run Tariffs—and That’s a Good Thing: Part II
Yesterday’s Breitbart Business Digest explained that the front-running on tariffs came from businesses and not from consumers. Today we expand on the evidence and explain why this is bullish for the economy.
If consumers were racing to buy before tariffs kicked in, we’d expect to see it in the retail data. We don’t. Retail sales rose 1.4 percent in March—a solid number, but nothing that smacks of panic buying. Durable goods categories were flat or declining. Electronics and appliances barely moved. Furniture sales slipped. Online retail edged up only slightly. Only autos spiked—and that likely had more to do with 0 percent financing offers than 10 percent tariff fears.
Bank of America’s credit and debit card data for late April reinforce the point. Credit card spending fell 3.3 percent year-over-year. Debit card spending was down as well. Key discretionary categories like furniture and department stores showed deep declines. If there were a rush to beat tariffs, we’d see surging card balances and spending spikes. Instead, we see the opposite.
And there’s a structural reason for that: most households don’t have the financial slack to front-run anything. According to the Federal Reserve’s latest Survey of Household Economics and Decisionmaking, just 54 percent of adults say they could cover three months of expenses with savings, and only 63 percent could handle a $400 emergency with cash or its equivalent. Those aren’t the kinds of households that clean out Walmart to hedge against macro policy shifts. Most families are budgeting month-to-month, setting aside money for retirement, and preserving some emergency funds. They’re not about to blow out their savings or run up debt to beat a theoretical tariff price increase.
The March personal income and outlays report shows just how unconcerned consumers remain. Disposable personal income rose 0.5 percent for the month. Real consumer spending also rose 0.7 percent, but the gains were concentrated in services, not goods. Spending on nondurable goods actually declined. Durable goods spending did rise, but that followed a sharp drop in February, suggesting more of a rebound than a buying spree. Prices for goods, especially durables, were flat to lower. Households didn’t front-load purchases. They simply kept spending steadily, modestly, and mostly on the same things they always do.
Business Front-Running Is Bullish for the Economy
And here’s where the whole story flips. The business front-running that dragged down GDP is actually a bullish signal. You don’t place massive orders and pile up inventory if you’re worried about a collapse in demand. You do it when you think sales are going to stay strong, and you want to lock in supply before costs rise. The March port surge wasn’t panic—it was preparation. You only build up inventory if you believe sales will follow.
Even more encouraging is that consumers didn’t follow suit. If households had accelerated their spending to beat tariffs, we’d be facing a hangover later this year. Instead, their spending patterns remain stable, which means demand hasn’t been pulled forward. It’s still out there. The biggest danger to the economy isn’t that consumers spent too much in Q1—it’s that the press misreads the numbers and scares everyone into retreat.
Final sales to private domestic purchasers—that cleaner measure of demand that strips out inventories, trade, and government—actually rose 3.0 percent in the first quarter. That’s an acceleration from Q4 and one of the strongest components of the entire GDP report. Beneath the surface of the negative headline lies a resilient economy with steady consumers and forward-looking businesses.
There’s no evidence that consumers are front-running tariffs. That’s not a sign of weakness—it’s a sign of strength. Demand hasn’t been borrowed from the future. It’s still there. Meanwhile, businesses are stocking up because they expect sales to hold. This may be the rare case where a negative GDP headline is a bullish tell in disguise.
The post Breitbart Business Digest: Business Front-Running Tariffs Is Bullish appeared first on Breitbart.
