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Fluid Tariff Landscape Impacting Consumers
Stretch of resiliency may be waning. While core retail sales rose 5.4 percent year-over-year in April, spending was unchanged on a monthly basis after adjusting for core CPI inflation — an indication that a pullback in consumer spending is materializing.. Even so, several key retail categories registered encouraging gains during the month, including restaurants and bars. These increases, however, were offset by declines across a trio of discretionary categories: apparel, sporting goods and general merchandise. Retailers in these segments have greater exposure to tariffs. Those already in challenging financial situations may struggle in the near term if they choose to raise prices, drop certain products or source items from different nations. Meanwhile, necessity-based categories are only mildly to modestly exposed to new duties. As a result, some will be able to avoid passing significant cost increases along to consumers during the second half.