Consumer spending holds strong

Summary

Marketplace Morning Report – "Consumer spending holds strong"

Date: July 10, 2026
Host: Sabri Benishour (in for Kimberly Adams)
Length: ~10 minutes

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Episode Overview

This episode of Marketplace Morning Report focuses on the resilience of U.S. consumer spending amid global economic uncertainty, such as conflict in the Strait of Hormuz and shifts in major trade agreements. The episode features interviews with Gus Faucher, Chief Economist at PNC Financial Services Group, on the economic outlook, and Patrick Anderson, CEO of Anderson Economic Group, regarding U.S. trade policy and its impacts on the auto industry.

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Key Discussion Points & Insights

1. Consumer Spending Stays Strong Amidst Global Turmoil

(02:01–04:44)

• Sabri Benishour opens with an update on second quarter economic reports from various companies, particularly noting disruptions caused by the Iran war and fluctuations in oil prices.
• Gus Faucher provides insight on overall economic health:
  • The U.S. economy in mid-2026 is "expanding solidly."
  • Consumer spending remains strong, serving as a major economic driver.
  • Business investment is robust, especially related to artificial intelligence sectors.
  • Inflation is still above the Federal Reserve’s comfort zone but expected to decrease due to recent energy price drops.

"Consumer spending continues to hold up. Business investment, particularly related to AI, is very strong, and so that's driving growth."
— Gus Faucher, 02:50

• Despite high gas prices and unresolved concerns around the Iran conflict, markets and consumers remain largely unfazed.
• Second quarter data (from PNC’s debit and credit card tracking) shows spending growth across both upper and lower-income groups.

"Households across the spectrum appear to be increasing their spending, which is good news for economic growth heading into the second half of the year."
— Gus Faucher, 04:18

2. Market Resilience to Geopolitical Shocks

(03:10–03:45)

• Oil prices climbed due to conflict in the Strait of Hormuz, but are stabilizing.
• The stock market has weathered these shocks surprisingly well.

"Even when we have had oil prices above $100 a barrel. The Strait of Hormuz closed. The stock market still did fairly well."
— Gus Faucher, 03:35

3. USMCA Trade Agreement Non-Renewal and Risks to the Auto Industry

(06:22–09:54)

• The Trump administration announces it will not renew the USMCA, instead seeking separate new deals with Canada and Mexico. The agreement remains in place for the next decade, but the industry faces future uncertainty.
• Patrick Anderson outlines significant risks for the auto sector:
  • Ending USMCA could be "existential" for Canadian and Mexican auto industries, which have been integrated with U.S. manufacturers since the 1960s.
  • Complexity around tariffs is rooted in the so-called "rules of origin," which determine where a car or part is officially made.

"The threat here to not renew the USMCA is a very significant one for the auto industry, and it's an existential one for the Canadian and Mexican auto industries."
— Patrick Anderson, 07:08

• Existing tariffs are already prompting automakers to relocate production, but a complete breakdown in cross-border trade would damage all three countries.
• Anderson warns against "a wholesale separation of the industry," emphasizing mutual dependency for high-quality, cost-effective auto parts.

"You create a wall...that would hurt both the United States and Canada and Mexico."
— Patrick Anderson, 08:52

4. Technical Tariff Challenges: Rules of Origin

(07:45–08:44)

• Anderson explains that auto parts frequently cross borders multiple times during production, making origin calculations and tariff applications highly complex.
• These rules, while rarely discussed publicly, are crucial to the functioning of North American auto manufacturing.

"You have parts that go back and forth across the border two and three times and even more. The question of, hey, where's that car built? Is never an easy answer."
— Patrick Anderson, 08:02

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Notable Quotes & Memorable Moments

• On market calm despite turmoil:
  "The stock market still did fairly well. And so I think they don't appear to be too concerned about that at this point."
  — Gus Faucher (03:35)

• On economic growth and consumer resilience:
  "Spending is growing at a good pace, a little bit above the rate of inflation."
  — Gus Faucher (04:12)

• On the depth of U.S.–Canada–Mexico auto integration:
  "We've been integrated with the United States all the way back to the 1960s in an agreement called Autopact, which preceded NAFTA, which preceded the USMCA."
  — Patrick Anderson (07:14)

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Key Segment Timestamps

• [02:01] — Start of main content; Sabri Benishour updates on global and economic events
• [02:33] — Interview with Gus Faucher on economic outlook, consumer spending, and inflation
• [03:10] — Market response to Strait of Hormuz conflict and oil prices
• [04:04] — Trends in consumer spending, including effects across income groups
• [06:22] — Introduction of USMCA trade deal topic, interview with Patrick Anderson
• [07:45] — Explanation of "rules of origin" in auto industry tariffs
• [08:52] — Impact of auto industry restructuring and tariff costs

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Episode Tone & Language

The coverage is clear, concise, and fact-driven, with a tone that is accessible yet authoritative. Both guests offer straightforward analysis—Faucher focusing on economic indicators and consumer behavior, Anderson providing background on trade negotiations and industry risks.

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This summary encapsulates the crucial economic updates, expert analysis, and industry concerns discussed in the "Consumer spending holds strong" episode, making it easy to catch up on the business headlines shaping the day's news.

Transcript

[A]

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[B]

Come hell or high gas prices, consumers keep on consuming. From Marketplace, I'm Sabri Benishore in for Kimberly Adams. Reports are trickling in from various publicly traded companies about how they did in the second quarter, right when the Iran war was at its most disruptive. And this is happening just as the war has flared up a bit again. The latest reports are that attacks between the US and Iran have paused for now, but talks are ongoing. Gus Faucher is here to talk about the Economic Outlook. He's chief economist at the PNC Financial Services Group. Hi, Gus.

[C]

Good morning.

[B]

Okay, so the global economy markets have had a few days to digest what is happening in the Strait of Hormuz. Oil prices are are up, but not as up as they were. What is the view on where we are at and the economics of where we are at?

[C]

We have an economy that is expanding solidly in mid-2026. Consumer spending continues to hold up. Business investment, particular particularly related to AI, is very strong, and so that's driving growth. Inflation is too high from the Fed's perspective, but is set to come down with lower energy prices over the past couple of months.

[B]

Our markets not concerned that we're going to get another round of inflation from the blockage of the Strait of Hormuz or more supply chain disruptions or Iran War 2.0, they're appearing to shrug that off.

[C]

We haven't seen much of a response to the current situation with Iran. Even when we have had oil prices above $100 a barrel. The Strait of Hormuz closed. The stock market still did fairly well. And so I think they don't appear to be too concerned about that at this point.

[B]

Consumers are the backbone of this economy, of our economic growth. And you guys over at PNC Financial Services Group have data on debit and credit card use. What are you seeing consumers doing in the face of higher gas prices and worries and anxiety?

[C]

Consumer spending growth did pretty well in the second quarter. Even when you take out the impact of higher gasoline prices and the one time effects of the World cup and the fact that Prime Day moved up from July to June this year, we continue to see consumers increase their spending. It's growing at a good pace, a little bit above the rate of inflation. And that's true whether we're talking about upper income consumers or lower income consumers. So households across the spectrum appear to be increasing their spending, which is good news for economic growth heading into the second half of the year.

[B]

Gus Faucher, chief economist at the PNC Financial Services Group. Thank you so much.

[C]

Thank you.

[D]

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[B]

the Trump administration has announced that it will not renew a major trade deal between the U.S. mexico and Canada. This is the USMCA, the United States Mexico Canada Agreement. It was negotiated during President Trump's first term to replace nafta. The agreement isn't disappearing. It'll stick around for the next decade. But everyone involved will need to negotiate new trade deals all over again. That carries very high risks for one industry in particular, autos, which represents about 18% of trade between the three countries. For more on that, we are joined by Patrick Anderson, CEO of Anderson Economic Group. Good morning.

[F]

Good morning to you.

[B]

The usmca, according to Trump administration, won't be renewed. It wants different new trade deals. What is the risk there to the US Auto industry?

[F]

The threat here to not renew the USMCA is a very significant one for the auto industry and it's an existential one for the Canadian and Mexican auto industries, which have been integrated with the United States all the way back to the 1960s in an agreement called Autopact, which preceded NAFTA, which preceded the USMCA. So it is a very big deal for all these suppliers, all these businesses, all the transport businesses in Canada and Mexico as well as in the United States.

[B]

This kind of comes down to what cars or what parts of cars get, what tariffs based on where they are from, determined by something called rules of origin. Can you explain what that is and what the Trump administration wants to change about it?

[F]

It's not uncommon for there to be a part that's built in Canada that goes across the Detroit river into somewhere in Michigan, gets put in, a larger assembly, goes back across. So you have parts that go back and forth across the border two and three times and even more. And the question of, hey, where's that car built? Is never an easy answer when you're looking at a vehicle from an American automaker here. So the rules of origin are very technical items. You hardly ever see them in the newspaper, but they matter a lot for trade between the United States and Canada, and they're really important for the auto industry.

[B]

If automakers had to move more production back to the US how difficult and how expensive would that be?

[F]

The answer is they're already doing it. There was $12.5 billion in auto tariffs applied on Canadian and Mexican parts and Automobiles alone in 2025. So $12.5 billion is a lot of reasons for automakers and suppliers to look for ways to reduce the tariff costs. What hasn't occurred and what I hope doesn't occur is a wholesale separation of the industry, meaning basically you create a wall, or effectively a wall, because that would hurt both the United States and Canada and Mexico. There are a lot of auto production in the United States. It depends on high quality, reasonable cost parts that are assembled in Canada and Mexico and vice versa. So we in the United States have a lot to lose if we don't come to a negotiated agreement and renew something like the usmca.

[B]

Patrick Anderson, CEO of Anderson Economic Group, thank you so much for coming on and speaking with us.

[F]

Good to talk with you today.

[B]

In New York, I'm Sabri Benishour with the Marketplace Morning Report. From APM American Public Media.

[G]

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[F]

APPLAUSE.