1 week Ago By Mark Grywacheski
For Wall Street, analyzing the confidence and optimism of the American consumer can be a daunting task. It can be akin to finding the proverbial needle in a towering haystack. Unlike hard metrics like unemployment, economic growth or inflation, Wall Street analysts and number crunchers are expected to somehow quantify a “feeling.
” As you’ve often heard me opine, confident and optimistic consumers tend to spend their money more freely. Ideally, that optimism on jobs, income and the economy fuel the consumer spending that drives our economy forward. Here in the U.
S., consumer spending accounts for roughly 70% of our nation’s entire economic growth. But consumers can be fickle creatures.
When consumer confidence is high, their spending can unexpectedly dip into hibernation. Likewise, when confidence is low, consumers may continue spending their money at a highly robust pace. It’s part of the many challenges Wall Street faces when trying to predict the spending habits of the American consumer.
The Consumer Confidence Index (CCI) has a benchmark of 100. Any level above 100 indicates American consumers are confident and optimistic. Below 100 conveys pessimism.
In March, the CCI was reported at just 92.9, down from February’s level of 100.1.
This 7.2 decline was the largest monthly drop since August 2021. It’s also the lowest level for the CCI in four years.
Mark M. Grywacheski It’s easy to understand the massive drop in consumer confidence. Since President Trump took office in late January, his agenda of global trade disputes have caused a heightened sense of uncertainty among both consumers and businesses.
But given the sharp decline in consumer confidence, historically, one would expect a corresponding drop in consumer spending. However, recent date shows that consumers have yet to temper their spending habits. In March, according to data from the U.
S. Census Bureau, retail sales surged by 1.4%.
This was the largest monthly increase in retail sales in more than two years. Over the past 12 months, retail sales have risen by a hefty 4.6%.
March’s surge was led by a 5.3% increase in sales of autos and auto parts and a 3.3% jump in sales from building materials.
We’re only in the first few months of these trade disputes but the data is proving to be quite interesting. So far, and that’s a big qualifier, consumers still appear ready and willing to open up their pocketbooks at the checkout counter. But retail sales tend to be a very volatile number from one month to the next.
Before Wall Street passes its judgement on the state of consumer spending, it wants to see a bigger pool of data in the upcoming months to help paint a broader impact these trade disputes are having on the American consumer. Countries that once followed the gospel of free trade and liberalism are changing tack and focusing on national interests before anything else, with Donald Trump’s America being a case in point. Our business editor Charles Pellegrin takes a deep dive into how geopolitics is reshaping the global economy with David Baverez.
He's a French investor based in Hong Kong and author of the book "Bienvenue en économie de guerre" or "Welcome to the wartime economy", published in French by Novice. The Trump administration announced on March 26 a 25% tariff on imports of automobiles and certain automobile parts , aiming to bolster U.S.
manufacturing and protect national security. Unsurprisingly, it sent shockwaves through the automotive industry and financial markets— consumers rushed to buy cars ahead of potential price hikes, and investors scrambled to assess the fallout. According to Finder data, there was plenty of fallout.
To add to the uncertainty, on April 14, President Donald Trump suggested he might temporarily exempt the auto industry to allow carmakers time to adjust their supply chains. The following data is of automaker stock price action through market close on April 14. Explore data of automaker stocks and the impact of auto tariffs globally to see which auto stocks have stalled—or accelerated—since tariffs hit.
The Trump administration's original March 26 executive proclamation imposes a 25% tariff on all cars shipped to the U.S., effective April 3.
Tariffs on key auto parts —engines, transmissions, powertrain parts and electrical components—will follow on May 3. The White House expects the auto tariffs to raise $100 billion in revenue annually. Tariffs like these are often seen as a direct hit to automakers' bottom lines because they drive up production costs and disrupt global supply chains.
While companies with robust U.S.-based supply chains could, in theory, gain a competitive edge as rivals reliant on foreign components face higher costs, industry analysts believe this new tax will spare few vehicle manufacturers .
The automotive industry has complex, cross-border supply chains , meaning there is no car that is 100% made in America. And Finder sees in automaker stock prices that no car manufacturer has been left unscathed. As of market close on April 14, the biggest winners, if you can call them winners, from Trump's tariffs are NWTN Inc.
, Honda, Porsche, BYD and REE Automotive. These stocks have seen the smallest decline since Trump's tariff announcement on March 26. The biggest losers are Mullen Automotive, Phoenix Motor, Polaris, Stellantis and Lotus Technology.
These stocks have seen the largest share price decline since the tariff announcement. According to Wedbush Securities Inc. analyst Daniel Ives, Trump's automobile tariffs "will cause pure chaos to the global auto industry" and increase the average price of cars sold in the U.
S. by as much as $10,000. And that's what we've seen so far when looking at share prices.
According to Finder's data, automaker stocks across the board responded negatively to President Trump's 25% tariff announcement, with U.S. carmaker stocks seeing the largest decline on average.
It's been a turbulent time for many U.S. automakers, including Lucid Group stock (Lucid Motors) , General Motors (GM) and Tesla (TSLA) .
There have been no winners in the European auto-making market, with Ferrari (RACE), Polestar (PSNY) and Porsche (DRPRY) all seeing major declines since the tariff rollout. Asian auto makers have also seen major dips since the tariffs were implemented. Middle Eastern automakers have seen many ups and downs (mostly downs) since the tariff announcement.
Tariffs are taxes that governments impose on goods entering or leaving a country, and they're typically used to raise revenue, protect domestic industries or regulate international trade. Dating back thousands of years, tariffs have long been a tool of economic policy . They gained prominence in the U.
S. with the U.S.
Tariff Act of 1789 , which aimed to protect domestic manufacturing and generate revenue, and have seen a resurgence in use as a policy tool under the Trump Administration. This story was produced by Finder and reviewed and distributed by Stacker. Mark Grywacheski is an expert in financial markets and economic analysis and is an investment adviser with Quad-Cities Investment Group, Davenport.
Disclaimer: Opinions expressed herein are subject to change without notice. Any prices or quotations contained herein are indicative only and do not constitute an offer to buy or sell any securities at any given price. Information has been obtained from sources considered reliable, but we do not guarantee that the material presented is accurate or that it provides a complete description of the securities, markets or developments mentioned.
Quad-Cities Investment Group LLC is a registered investment adviser with the U.S. Securities Exchange Commission.
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