2% annual rate, down from a 3.1% rate in the
first three months of the year.
The economy is widely expected to slow
further in the months ahead as income
growth slows, businesses delay expansions
and higher prices from tariffs depress
consumer spending. Companies have already
reduced investment spending, and exports
have dropped against a backdrop of slower
global growth.
Americans have already turned more
pessimistic. The University of Michigan’s
consumer sentiment index, released last week,
fell by the most since December 2012.
“The data indicate that the erosion of
consumer confidence due to tariff policies is
now well underway,” said Richard Curtin, who
oversees the index.
Some retailers may eat the cost of the tariffs.
Target confirmed to The Associated Press
that it warned suppliers that it won’t accept
cost increases arising from the China tariffs.
But many smaller retailers won’t have the
bargaining power to make such demands and
will pass the costs to customers.
Philip Levy, chief economist at the San
Francisco freight company Flexport who
was an adviser in President George W. Bush
administration, said it’s hard to say for sure
when the latest tariffs may hit U.S. customers
in the form of higher prices.
But, he added, “If you had to pick a time to do
it, this is the worst possible time” because it’s
when the bulk of holiday goods are brought
into the country.