In early April 2025, consumer spending in the U.S. surged as Americans rushed to make purchases ahead of President Donald Trump’s planned tariffs, according to data from JPMorgan. While discretionary spending saw the biggest jump, economists warn this spike doesn’t signal long-term economic growth. Instead, it reflects a short-term reaction to anticipated price hikes, with many consumers and businesses accelerating purchases to avoid future costs. Experts, including Chicago Fed President Austan Goolsbee, suggest this “pull-forward” effect could lead to a spending drop-off later in the year, raising questions about the broader economic impact of the tariff strategy.
Read the article to know more about how Trump’s tariff plans are influencing consumer behavior and be prepared to answer the questions below.
Vocabulary Questions:
- What does “preemptive purchasing” mean? “Goolsbee also cited evidence of businesses stockpiling inventory to last two to three months and said so-called preemptive purchasing appeared more common among companies than consumers.” Use it in a sentence and give a synonym.
- What does “discretionary spending” mean? “Much of the April gain came from discretionary spending, which rose by 4.3% in the first 15 days year-over-year, versus 2.9% growth in non-discretionary spending.“ Use it in a sentence and give a synonym.
- What does “seismic shift” mean? “Anecdotal reports show Main Street consumers bracing for what many view as a seismic shift in global trade.” Use it in a sentence and give a synonym.
Discussion Questions
- What are your thoughts on the surge in consumer spending ahead of Trump’s tariff implementation?
- Have you ever rushed to buy something because you heard the price might go up soon? What made you act quickly, and how did it feel afterward? How might that experience relate to how people are reacting to the tariff news?
- How do consumer expectations about future economic policies, like tariffs, influence their current spending behaviors? Can you think of examples where fear or uncertainty has affected how people shop?
- If you knew your favorite items—like clothes, electronics, or snacks—were about to get more expensive, what would you do? Would you change your spending habits? Why or why not?
- If people and businesses are spending more now to avoid higher prices later, do you think this is a smart strategy or could it create bigger problems down the line Why do you think so?