The number of Americans who increased their spending in the past three months has declined, as consumers worry about the uncertainty of President Donald Trump’s tariff policies and Elon Musk’s government-led efforts to reduce the size of government, according to a survey by KeyBanc Capital Markets.
The brokerage firm’s first-quarter survey of 1,000 domestic consumers showed that only 24% of respondents said they had increased their spending, the lowest rate since the fourth quarter of 2019.
In addition to concerns about food costs, nearly a quarter of respondents also expressed concern about the economic outlook and political uncertainty. A total of 58% of respondents admitted they had changed their spending habits because of the tariffs, according to KeyBanc. Elon Musk’s efforts through the Department of Government Efficiency to reduce federal spending were also cited as a factor.
The survey was conducted between March 21 and April 1, after the Trump administration imposed tariffs on China, Mexico and Canada. On April 2, Trump announced sweeping retaliatory tariffs on a range of countries, although he later delayed some of them due to turmoil in stock and bond markets. On Friday, the White House also exempted technology products such as smartphones and computers from the import taxes.
However, economists and business leaders have warned that the fluctuating tariff action has the potential to fuel inflation, dampen economic activity and make it difficult for companies to plan for the future. The KeyBanc survey also showed that consumers expect to pay more for goods in the next three months. A separate study from the University of Michigan found that inflation expectations for the coming year jumped to 6.7%, the highest since 1981, while consumer sentiment fell 11% from March on concerns about the escalating trade war.
