Trade war fears are becoming more apparent for the average American, as evidenced by the University of Michigan’s latest survey on consumer sentiment, which plummeted to 89.8 for August.
“While the overall level of sentiment is still consistent with modest gains in consumption, the data nonetheless increased the likelihood that consumers could be pushed off the ‘tariff cliff’ in the months ahead.”
A Refinitiv poll of economists showed the monthly Survey of Consumers was originally projected to drop to only 92.1 after a healthy 98.4 rating in July, according to CNBC. But that number was revised down once the official results were calculated.
The trade war between the United States and China may be contributing as consumers try to discern what impacts tit-for-tat tariffs between the two countries will mean for their wallets.
“Trump’s tariff policies have been subject to repeated reversals amid threats of higher future tariffs. Such tactics may have some merit in negotiations with China, but they act to increase uncertainty and diminish consumer spending at home,” Richard Curtin, chief economist for the Survey of Consumers, said in a release.
That number could continue to drop as more tariffs, including ones that target more consumer goods, go into effect soon. Starting Sunday, the U.S. government will begin a 15% tariff on $112 billion in Chinese imports. Items targeted include smartwatches, TVs, sporting goods, diapers, meat, dairy products, paper plates and more.
Curtin revealed that one out of every three individuals polled spontaneously mentioned tariffs, which shows that the duties are creating worry. He also said those who did mention tariffs without being prompted also were pessimistic when it came to inflation and unemployment.
“While the overall level of sentiment is still consistent with modest gains in consumption, the data nonetheless increased the likelihood that consumers could be pushed off the ‘tariff cliff’ in the months ahead,” Curtin said.
July did see consumer spending rise by a healthy 0.6%, which has helped bolster a slowing U.S. economy that only grew by 2% in the second quarter.