You told us how tariffs are affecting you

Summary

Episode Summary: "You Told Us How Tariffs Are Affecting You"

Podcast: The Indicator from Planet Money
Host: Adrienne Ma and Waylon Wong
Release Date: June 23, 2025

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1. Introduction: The Shifting Landscape of Consumer Confidence

In this episode of The Indicator from Planet Money, hosts Adrienne Ma and Waylon Wong delve into the turbulent journey of American consumer confidence amidst the fluctuating landscape of tariffs introduced under President Trump's administration. The discussion is anchored around a listener survey that captures firsthand how tariffs are reshaping spending habits across the country.

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2. The Roller Coaster of Consumer Confidence

Adrienne Ma begins by highlighting the dramatic swings in consumer sentiment over recent months. "Over the past several months, the American consumer has been on a rollercoaster ride," she states (00:12). Waylon Wong elaborates on the initial optimism before Trump's presidency, which saw consumer confidence rising steadily. However, the introduction of successive tariffs led to a significant decline by May, pushing consumer sentiment to near-record lows. Recently, there has been a slight rebound, yet confidence remains below early-year levels. "Consumers today are feeling way less optimistic about the economy than they were at the start of the year," Wong emphasizes (00:43).

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3. Listener Survey: Real Stories of Tariff Impact

The hosts conducted a non-scientific survey asking listeners how the current economic climate, influenced by tariffs, is affecting their spending behaviors. Adrienne Ma shares key findings, noting widespread anxiety among consumers.

Nicole Potenza from Morristown, New Jersey, shares her cautious approach to big purchases:
"Lately I've noticed that I've been way more careful about making big purchases," she confides (03:12). Despite her anxiety over a potential recession, Nicole finds herself spending more on small indulgences like coffee and takeout, embodying the Lipstick Index theory. "I've been spending more on little things like coffee or takeout. And I guess that's probably me trying to take care of myself when everything feels kind of uncertain," she adds (03:20).

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4. The Lipstick Index: Small Indulgences in Tough Times

Waylon Wong connects Nicole's behavior to the Lipstick Index, a theory suggesting that during economic downturns, consumers tend to spend more on small luxuries as a way to cope with uncertainty (03:40). This phenomenon indicates a shift in spending from big-ticket items to minor indulgences, providing a psychological boost amidst financial concerns.

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5. Big Purchases: Cars and Financial Strain

Listeners also reported accelerated big-ticket purchases driven by fears of impending price hikes. Holly Boardman from Orlando, Florida, reveals her proactive approach:
"I'm pretty sure the stock market's going to crash somehow within the next four years. So I decided that I needed to do some things to invest money elsewhere than in the stock market," she explains (04:05). Holly's decision to cash in some investments to buy a new car echoes a common trend among consumers who are acting against their usual personal finance principles to safeguard against anticipated economic instability.

Similarly, Juan Castillo, a high school teacher in Laredo, Texas, shares his rush to purchase a vehicle:
"He hears stories that they're gonna raise their cars 2 or $3,000 extra. We don't want to pay 2 or $3,000 extra. So what do we do? We make a quick decision," Juan recounts (05:48). This hasty buying behavior has led to crowded dealerships and snap decisions, often resulting in financial strain. "We used our emergency fund to buy a new car, which is breaking all of the personal finance rules I have ever believed in," Adrienne Ma observes (06:42).

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6. Panic Buying and Stocking Up on Essentials

Beyond automobiles, consumers are also indulging in the rapid purchase of electronics and household appliances. Jonathan Friedman from Laughlin, Nevada, illustrates this trend with his stocking up habits:
"We're just buying all kinds of stuff... we're spending $200 at Walmart every trip just to get stuff. Mostly fruit," he shares (07:45). The emphasis on purchasing imported goods like bananas, mangoes, and other fruits highlights how tariffs on imports are driving consumers to secure these items before potential price increases take effect.

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7. Case Study: Phil Lazarus and Gas Gear Acquisition Syndrome

A particularly relatable story comes from Phil Lazarus of Lincolnshire, Illinois, a guitarist who finds himself overwhelmed by the desire to purchase music equipment.
"On Reddit they talk about being afflicted with gear acquisition syndrome and I'm definitely a victim because the fact of the matter is it's much easier to buy guitars than it is to play them," Phil admits (09:08). Despite attempting to curb his spending with a New Year's resolution, Phil succumbs to the lure of buying more gear, a behavior partially influenced by tariffs on imported components. His confession, "I've bought more gear in the last three months than I had in the last three years," underscores the broader impact of economic uncertainty on discretionary spending (09:31).

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8. The Broader Economic Implications

Adrienne Ma and Waylon Wong collectively emphasize that while tariffs have not yet led to the widespread inflation many economists anticipated, the uncertainty surrounding them is significantly altering consumer behavior. The urgency to make purchases before price hikes and the diversion of funds from savings to immediate spending reflect a cautious yet reactive consumer base navigating through tariff-induced anxieties.

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9. Conclusion: Navigating the Tariff-Driven Economy

The episode concludes by acknowledging the diverse ways in which tariffs are influencing American consumers, from substantial investments in big-ticket items to the accumulation of small indulgences and essential goods. This snapshot of consumer behavior provides valuable insights into how economic policies can ripple through everyday financial decisions, shaping the broader economic landscape.

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Notable Quotes:

• "Consumers today are feeling way less optimistic about the economy than they were at the start of the year," — Waylon Wong (00:43)
• "I've been spending more on little things like coffee or takeout. And I guess that's probably me trying to take care of myself when everything feels kind of uncertain," — Nicole Potenza (03:20)
• "We're spending $200 at Walmart every trip just to get stuff. Mostly fruit," — Jonathan Friedman (07:45)
• "I've bought more gear in the last three months than I had in the last three years," — Phil Lazarus (09:31)

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This episode of The Indicator from Planet Money offers a comprehensive look into how tariffs are reshaping consumer confidence and spending habits in the United States. By featuring real-life stories and expert analysis, Adrienne Ma and Waylon Wong provide listeners with a nuanced understanding of the current economic climate and its tangible effects on everyday lives.

Transcript

[NPR]

NPR.

[Adrienne Ma]

Over the past several months, the American consumer has been on a rollercoaster ride.

[Waylon Wong]

Right before President Trump took office, consumer confidence was rising steadily. Many voters and businesses felt optimistic that Trump would be good for the economy. But then as Trump rolled out round after round of new tariffs on U.S. trading partners, things they took a turn.

[Adrienne Ma]

By May, consumer sentiment had plunged to near record lows. And then just in the past couple of weeks, it turned back up.

[Waylon Wong]

Even with this recent boost of consumer confidence, the fact remains that consumers today are feeling way less optimistic about the economy than they were at the start of the year, and that is having a significant effect on the way consumers consume. This is the indicator from Planet Money. I'm Waylon Wong.

[Adrienne Ma]

And I'm Adrienne Ma. Earlier this month, we did a little survey of our own, non scientific, of course, but we asked listeners, how is this moment in the economy affecting your spending habits? And you responded.

[Waylon Wong]

So today on the show, we step off the rollercoaster for a second and check in directly with the American consumer.

[Liz Ann Saunders]

This message comes from NPR sponsor Charles Schwab with its original podcast on Investing. Each week, hosts Liz Ann Saunders, Schwab's chief investment strategist, and Kathy Jones, Schwab's chief fixed income strategist, along with their guests, analyze economic developments and bring context to conversations around stocks, fixed income, the economy and more. Download the latest episode and [e-mail] oninvesting or wherever you get your podcasts. Support for NPR and the following message come from Edward Jones. A rich life isn't always a straight line. Unexpected turns can bring new possibilities. With a hundred years of experience navigating ups and downs, Edward Jones can help guide you. Let's find your rich together.

[NPR]

EDWARD jones, Member, SIPC this message comes from Amazon Business. How can you grow your business from idea to industry leader? Bring your vision to life with smart business buying tools and technology from Amazon Business. Simplify how you stock up to get ahead. Go to amazonbusiness.com for support.

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[Adrienne Ma]

Americans are big spenders. Consumer spending makes up two thirds of our economy and per person, we spend more on consumption than almost any other country in the world. So we wanted to know if the past few months have affected that. And one big takeaway from the responses we got was that a lot of you are worried.

[Nicole Potenza]

Lately I've noticed that I've been way more careful about making big purchases.

[Waylon Wong]

This is Nicole Potenza from Morristown, New Jersey.

[Nicole Potenza]

And I think part of that's me being anxious about the economy and the possibility of a recession. But then at the same time, I've been spending more on little things like coffee or takeout. And I guess that's probably me trying to take care of myself when. When everything feels kind of uncertain.

[Waylon Wong]

What Nicole is describing here actually resembles this theory called the Lipstick Index. The idea is that in times of economic uncertainty, people often spend more on little indulgences.

[Adrienne Ma]

Meanwhile, over in Orlando, Florida, Holly Boardman is also worried about a downturn. Holly's in her 70s, and after seeing the stock market gyrations in recent months, she decided to cash in some of her investments.

[Holly Boardman]

I'm pretty sure the stock market's going to crash somehow within in the next four years. So I decided that I needed to do some things to invest money elsewhere than in the stock market. I still have a good bit of money in stocks, but I needed to.

[Adrienne Ma]

Take profits even more than the stock market. Almost everyone who responded to our call out told us they are worried about tariffs.

[Waylon Wong]

Now, we know it's been hard to keep track of tariffs because they seem to change every week. So here's a rough recap of where we are. There's currently a 10% tariff on all imports for many countries and a 25% tariff on many cars and auto parts. Then you've got a 30% tariff on Chinese goods and a 50% tariff on imported steel and aluminum, which also affects home appliances. Oh, and then don't forget there are these so called recession reciprocal tariffs on dozens of other countries that Trump announced in April and then postponed. Those could go back into effect on July 9th.

[Holly Boardman]

Whew.

[Waylon Wong]

Do you have all that straight, Adrian?

[Adrienne Ma]

Not at all. But you know, it is okay if you also didn't quite follow this, because the main point is this. Even though the tariffs have not yet produced the widespread inflation a lot of economists feared, all this tariff talk is affecting consumer behavior. And a lot of people are making big purchases to try and get ahead of price increases. People like Juan Castillo.

[Waylon Wong]

Juan is a high school teacher in Laredo, Texas. Recently, he was looking to buy a car, a process he says he would normally spend a couple months on, you know, shopping for deals. But back in March, all the tariff talk from President Trump made him nervous.

[Juan Castillo]

You know, he hears stories that they're gonna raise their cars 2 or $3,000 extra. We don't want to pay 2, $3,000 extra. So what do we do? We make a quick decision.

[Waylon Wong]

Juan and his family rushed to the Toyota dealership in San Antonio.

[Juan Castillo]

The place was packed and a lot of people are there because they were buying cars before tires were raised. Funny thing, the dealership, it showed two prices, the tariff price and the sticker price. And this is the price you're gonna pay next week if you wait. So it's like, all right, we fell for the trap.

[Waylon Wong]

Well played, car dealership.

[Adrienne Ma]

But Juan, don't feel too bad because you're actually in good company. A lot of listeners told us a similar story. We used our emergency fund to buy a new car, which is breaking all of the personal finance rules I have ever believed in.

[Holly Boardman]

I bought a new car to replace my two old Camrys years.

[Adrienne Ma]

We decided to buy a new car.

[Phil Lazarus]

Because it made more sense financially.

[Juan Castillo]

And I hate that car payment.

[Waylon Wong]

Okay. I'm now feeling peer pressured, like I need to run out and buy a new car. Let's put a pin in that though.

[Adrienne Ma]

Seems like everybody's doing it.

[Waylon Wong]

Even though these car buyers are gritting their teeth, they might turn out to be the lucky ones. Industry analysts say price hikes could hit in the next couple of months as dealers sell down their inventory of pre tariff cars.

[Adrienne Ma]

And cars are not the only thing listeners told us they're rushing to buy. Many of you are scooping up electronics and appliances.

[Jonathan Friedman]

It's called panic buying. But I'm not panicking.

[Adrienne Ma]

You know, Jonathan Friedman from Laughlin, Nevada, not panicking yet.

[Jonathan Friedman]

Portable air conditioner for my room because it gets so hot out here. I got that. Got a couple electronic stuff. We think we have to buy the iPhone soon.

[Waylon Wong]

On top of these big ticket items, Jonathan, he is also stocking up on smaller ticket things.

[Jonathan Friedman]

We're just buying all kinds of stuff. Fruit and whatever clothing the girls want at Walmart. You know, we're spending $200 at Walmart every trip just to get stuff. Mostly fruit.

[Waylon Wong]

Fruit, because a lot of that stuff is imported.

[Jonathan Friedman]

Bananas, mangoes, mandarins, oranges, kiwis, and just any fruit the kids want most.

[Adrienne Ma]

And Jonathan actually sent us a picture of all the fruit, like stacking up in his kitchen. And he is not the only one stocking up on imported consumables. One person told us they bought a 12 pound bag of coffee.

[Waylon Wong]

Okay, easy there. I hope they were like parceling that out over the summer.

[Adrienne Ma]

Another said they bought half a dozen bottles of French cognac.

[Waylon Wong]

Okay, party at their house.

[Adrienne Ma]

And similar to fancy French booze. Our final listener testimony may be more an example of a nice to have purchase than a necessity. It comes from Phil Lazarus of Lincolnshire, Illinois, and Phil plays guitar and sings in a dad rock band.

[Waylon Wong]

That is a rock band made up of dads, not to be mistaken for the genre dad rock.

[Adrienne Ma]

Ooh, look who's a music critic all of a sudden.

[Waylon Wong]

Just call me Lester Bangs.

[Adrienne Ma]

Adrian yes, and maybe even more than playing music, Phil loves buying music gear.

[Phil Lazarus]

On Reddit they talk about being afflicted with gas gas gear acquisition syndrome and and I'm definitely a victim because the fact of the matter is it's much easier to buy guitars than it is to play them.

[Adrienne Ma]

Now Phil says he's been trying to cut down on his gas problem.

[Phil Lazarus]

I made a New Year's resolution, no more gear in 2025.

[Waylon Wong]

But then he thought about how a lot of music equipment is either manufactured overseas or assembled in the US from imported components.

[Phil Lazarus]

And I kind of saw the writing on the wall and I said, well, you know, New Year's resolutions are made to be broken. The last three months I've bought three guitars, two amps and 18 pedals. The punchline is that I've bought more gear in the last three months than I had in the last three years.

[Waylon Wong]

This story is amazing and I feel like highly relatable.

[Adrienne Ma]

From appliances to guitar pedals to produce. This is just a snapshot of how consumers are changing their spending habits in this roller coaster economy of ours.

[Waylon Wong]

Thanks to everyone who sent in a story and even if we didn't get to feature it in the show, it really helped us understand what's going on out there. So we really appreciate it. And if you have a tariff related story to tell, please send us an email indicatorp npr.org this episode was produced.

[Adrienne Ma]

By Cooper Katz McKim and Ella Feldman. It was engineered by Jimmy Keeley and fact checked by Sierra Juarez. Cake and Cannon is our editor and the indicators production of npr.

[Liz Ann Saunders]

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[NPR]

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