Americans, and especially Democrats, are “front-loading” their spending as tariff trepidation spurs purchases to get ahead of expected price hikes, according to UBS chief economist Paul Donovan.
President Donald Trump announced Feb. 1 that he would impose tariffs on Mexico, Canada and China, effective Feb. 4. Although tariffs on Mexico and Canada have been postponed for 30 days, the China tariffs went into effect and consumers are scrambling to buy before prices spike.
“Sentiment and consumer spending data suggests Democrats (in particular) in the US seem to have been fearful that trade taxes mean higher prices, and have rushed to buy in advance,” Donovan said in a note on Friday. “The pattern of consumer durable goods buying suggests ‘front-loading’ consumption, but ‘buy now’ also implies ‘don’t buy later’ and may slow future demand.”
Tariff concerns and their impacts on prices are on the forefront of consumers’ minds when it comes to purchasing decisions.
According to the latest survey from the University of Michigan, consumer sentiment dropped 5% across every political divide in February, hitting the lowest level since July 2024.
Source: FORTUNE
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