JUANA SUMMERS, HOST:
Americans are in a funk about the economy, and it's beginning to affect how they spend their money. Personal spending in February was weaker than expected, and that points to a slowdown in economic growth. Surveys suggest that many people are nervous about President Trump's trade policies, and investors are nervous, too. The Dow Jones Industrial Average tumbled more than 700 points today. NPR's Scott Horsley is here with the latest. Hey, Scott.
SCOTT HORSLEY, BYLINE: Hi, Juana.
SUMMERS: Scott, I understand that we got some new economic numbers this morning. What did they tell us?
HORSLEY: They tell us that people are worried. Now, the latest survey from the University of Michigan shows consumer sentiment fell for the third month in a row. People across the political spectrum are worried about inflation. They're worried about the job market. Some of that is being driven by President Trump's policies on tariffs and government job cuts. Dan Fitch is a nurse who works for the Veterans Administration in Portland, Oregon. He feels like his own job's pretty secure, but he worries about his colleagues and says the overall outlook is not great.
DAN FITCH: I don't see things going in a positive direction. I really don't. The cost of living has already been elevated for a while. Start adding on tariffs, I don't see how that positively affects anybody.
HORSLEY: Fitch says he and his family have been cutting back on spending. They're not traveling as much as they usually do. He's even stopped paying for haircuts for his 3- and 7-year-old sons.
FITCH: Yeah, I bought a pair of clippers, and I'm cutting both of my kids' hair now. Heck, I might start doing my own, too. I did for a number of years when I was in college. It might be time to try again. It can get pretty ugly, but it's worth it for a little bit more peace of mind where your money's concerned.
HORSLEY: And Fitch is not the only one taking clippers to his family's budget. Today, the Commerce Department said spending on services like haircuts rose by a meager two-tenths of a percent last month, and spending at restaurants was actually down.
SUMMERS: I mean, I'm not an expert, but this does not sound great for the economy.
HORSLEY: It's not. Consumer spending is the biggest driver of the U.S. economy, and it has been remarkably resilient in recent years, but senior economist Dan North of Allianz Trade North America says that consumer engine may be sputtering a bit.
DAN NORTH: I think if you're a consumer, you're sitting there and saying, I'm not so sure about these tariffs here. My income's dwinding a little bit. Oh, and by the way, I just opened up my credit card bill, and there's still items I need to pay off from Christmas. I'm going to draw my horns in a little bit.
HORSLEY: Now, while services spending was weak last month, we did see a burst of spending on big ticket items. Some of that may have been defensive spending. The shoppers tried to get ahead of the president's tariffs.
SUMMERS: Yeah, and when you talk about big ticket items, that makes me think of cars and the 25% tariff that Trump announced a few days ago. That goes into effect next week, right?
HORSLEY: That's right. And Trump has also telegraphed other far-reaching tariffs next week. Look, tariffs are taxes, and economists say that is going to push prices higher. I spoke to a man this morning who timed his own new car purchase a couple of weeks ago deliberately to beat the president's tariffs. He also discovered that his favorite oatmeal comes from Canada. So to avoid import taxes on that, he stockpiled enough to keep his cereal bowl full for the next eight months or so. Likewise, Dawn Woodward, who lives in Michigan, recently bought her son a new TV weeks before his birthday because she was worried about tariffs. When it comes to other shopping, though, Woodward's been trying to cut back.
DAWN WOODWARD: And I found that stuff that I thought I needed - oh, my gosh, I need this, or I need that - I didn't really actually need most of it.
HORSLEY: Instead of buying stuff, Woodward says she's putting more money aside in her family's emergency fund, and she's not alone. The share of income that people socked away in savings last month rose to its highest level in eight months.
SUMMERS: NPR's Scott Horsley, thanks.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
