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Investing.com - The amount of Americans who have raised their spending over the past three months has slipped as consumers fret over uncertainty around U.S. President Donald Trump’s tariff plans and an ongoing government downsizing effort led by Elon Musk, according to a survey from KeyBanc Capital Markets.
The brokerage’s first-quarter survey of 1,000 domestic consumers showed that 24% of respondents said they had increased expenditures during the period -- the lowest reading since the fourth quarter of 2019.
Along with worries around food costs, nearly a quarter of participants in the study said they had fears about the economic outlook and a murky political picture.
In terms of specific policies, 58% of respondents indicated that they had shifted their spending habits due to the tariffs, KeyBanc added. Efforts by the Elon Musk-helmed Department of Government Efficiency to slash federal expenditures were also cited.
The analysts noted that the survey was conducted between March 21 and April 1, a timeframe that followed the Trump administration’s move to slap tariffs on China, Mexico and Canada.
On April 2, Trump unveiled sweeping reciprocal tariffs on countries around the world, although he later partially delayed the measures in the wake of deep ructions in the stock and bond markets. Late on Friday, the White House also exempted some tech-related products like smartphones and computers from the levies.
Still, economists and businesses have flagged that Trump’s back-and-forth tariff agenda could drive up inflation, weigh on economic activity, and make it more difficult for companies to plan for the future.
The KeyBanc survey found that consumers largely expect to pay more for items in the next three months compared to prior two quarters.
"Given the financial market volatility, and recent consumer confidence readings, we believe the percent of respondents worried about the economic outlook and personal income has increased since the close of our survey," analysts at KeyBanc said.
A separate survey from the University of Michigan last week found that year-ahead inflation expectations had spiked to 6.7% in April, the highest mark since 1981. Broader consumer sentiment, meanwhile, plunged by 11% versus March "amid growing worries about trade war developments that have oscillated over the course of the year."