Car purchases rise, consumer spending slows

At car dealerships across the country, consumers are rushing to buy new vehicles ahead of tariff-related price hikes. Some shoppers have also replaced iPhones early.

Yet when it comes to other items, retailers aren’t seeing widespread stock-ups or huge waves of early purchases due to tariffs — or at least not yet. Instead, U.S. shoppers seem hesitant to spend and inclined to delay purchases rather than speed them up, according to consumer surveys by market researchers and early reads from the Federal Reserve.

Consumer spending, excluding autos, was lower overall across the country, according to the Federal Reserve’s latest Beige Book report on economic conditions released on Wednesday. Five of the Fed’s districts saw slight growth in economic activity, four districts had slight to modest declines and three reported relatively unchanged trends since the central bank’s previous release in early March.

Most districts saw moderate to robust sales of vehicles and some nondurable items, which the report attributed to “a rush to purchase ahead of tariff-related price increases.” Yet both leisure and business travel were down, and the report noted that “uncertainty around international trade policy was pervasive across [district] reports.”

Beyond some of the pricier purchases that stand to cost a lot more even under a 10% tariff on imports, early data suggests the duties have intensified consumers’ desire to watch their wallets closely as they wait to see how Trump’s trade policy unfolds. Companies from Chipotle to PepsiCo and American Airlines said this week that they’re seeing pockets of slower spending.

U.S. shoppers have adopted “a conservation mentality” for their cash as they follow fast-changing headlines and see wild swings in the stock market — and their savings and retirement accounts, said Steve Zurek, vice president of thought leadership at NielsenIQ.

“There’s so much uncertainty right now that shoppers just don’t know what to do,” he said. “There’s nowhere to hide here — all they can do is control the household economics they have.”

Some survey results have backed up a theory that shoppers are kicking the can rather than accelerating purchases: about 35% of U.S. consumers said they planned to put off a major purchase, such as a home, car, appliance or furniture because of tariffs, according to a NielsenIQ survey. That compares with just 7% who said they anticipated making a major purchase now to avoid the possibility of a higher price later. The market researcher conducted the survey in late March, days before Trump unveiled steep tariffs on dozens of countries, almost all of which he later lowered for 90 days.

In another reflection of consumer caution, along with higher mortgage rates, home sales in March fell to the slowest pace since 2009, according to the National Association of Realtors.

Retailers, airlines, car manufacturers and more will be watching consumer behavior closely as they try to predict demand and buy inventory. Some of those companies have accelerated their own orders of longer-lasting and pricier durable goods, such as equipment, to beat tariff-related price hikes.

Here’s a look at what we know so far about consumers’ early response to tariffs.

In tariff fear-buying, one category stands out: cars.

The auto sector outperformed the rest of the retail market in March, as sales excluding motor vehicles and parts increased 0.5%, while sales in the auto sector jumped 5.3%, the Commerce Department reported last week.

While Trump eased additional tariffs on many countries that export goods to the U.S., he has kept a 25% levy on all imported vehicles.

Consumers are rushing to showrooms to try to save thousands of dollars on a new vehicle.

Cox Automotive estimates the 25% tariff on non-U.S. assembled vehicles will increase the average cost of imported vehicles by $6,000, while the cost of vehicles assembled in the U.S. will rise by $3,600 due to upcoming 25% tariffs on automotive parts. Those are in addition to $300 to $500 hikes as a result of previously announced tariffs on steel and aluminum.

Automotive executives and dealers reported significant gains in showroom traffic and sales once Trump confirmed the tariffs late last month and into April.

“Concerns about potential future vehicle prices due to tariffs led to a surge in March sales, and April began with similar robustness,” said Charlie Chesbrough, senior economist at Cox Automotive.

New vehicle sales were running 22% above the seasonally adjusted pace of last year and were up more than 8% through early April on a volume basis, according to Cox.

“It’s been busy. Everybody’s buying now because…