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Execs starting to worry about tariffs' effects on consumers

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    Shoppers leave the Home Depot store in Manchester, N.H., Thursday, Aug. 15, 2019. The Home Depot Inc. (HD) on Tuesday, Aug. 20, reported fiscal second-quarter net income of $3.48 billion. On a per-share basis, the Atlanta-based company said it had net income of $3.17. (AP Photo/Charles Krupa)

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    FILE - In this July 11, 2019, file photo lumber is stacked at the Home Depot store in Londonderry, N.H. The Home Depot Inc. on Tuesday, Aug. 20, reported fiscal second-quarter net income of $3.48 billion. Home Depot cut its sales expectations for the year as lumber prices slid and the company braces for the potential impact of tariffs on its customers. (AP Photo/Charles Krupa, File)

Published August 21. 2019 05:39AM

Americans continue to shop, vacation and buy cars at a brisk clip. But corporate America is starting to worry out loud that President Donald Trump's tariffs will depress consumer spending and undermine the economy.

Home Depot, the nation's largest home improvement chain, said as much on Tuesday, when it reported higher-than-expected profits for the quarter but cut its sales expectations for the year, citing the tumbling price of lumber and the "potential impacts to the U.S. consumer arising from recently announced tariffs."
That marked at least the second time in a week that retail executives raised the fear that consumers might pull back on spending.
Last Wednesday, Macy's warned that its customers have no appetite for higher prices. The department store chain has already raised prices on luggage, housewares and furniture because of the 25% import duties imposed in May. CEO Jeff Gennette said Macy's is trying to offset the costs of looming tariffs on shoes and clothing.
So far, consumer spending has insulated the U.S. economy from the slump that is taking hold in such places as China and Germany. But Trump's trade wars with Beijing and other key trading partners have heightened anxieties.
Dozens of American companies have pared their profit and sales expectations. The markets have swung wildly. Barometers of housing and manufacturing have slumped. Consumer confidence, though healthy on a historical level, dropped sharply this month.
And that is especially troubling, because consumer spending accounts for roughly 70% of economic activity.
That recent slump in consumer confidence has raised the odds of a U.S. recession in the next year to 45% from 40% in mid-July, according to analysts for JPMorgan Chase.
If consumers are to keep fueling economic growth, they might need reassurance that Trump won't escalate his trade wars.
"If trade policy tensions ease and the labor market remains solid, we would likely see a rebound in consumer sentiment," said Jesse Edgerton, a senior economist at JPMorgan Chase.
Unlike Macy's, which, like all department stores, faces tumultuous changes in how and how much people shop, Home Depot is doing brisk business. Mortgage rates are hovering at historic lows, and the aisles of Home Depot are bustling with homeowners.
But housing starts have tumbled 3.1% so far this year, according to the Census Bureau. This has reduced demand for lumber and caused wood prices to tumble roughly 20% over the past 12 months, according to government figures.
In an otherwise solid period for overall retail sales, purchases at building material and garden supply stores have increased a meager 0.4% year-to-date, according to the Census Bureau. Sales at furniture stores have slumped 0.5%.
The Trump administration delayed most of the tariffs it planned to impose on Chinese products last week and dropped others altogether, responding to pressure from businesses and growing fears that a trade war is threatening the U.S. economy.
The administration was also mindful that the latest round of tariffs would raise consumer prices during the crucial holiday shopping season, so it delayed nearly 60% of them until Dec. 15.
That eased the risk of an immediate shock but raised concerns about what comes next.
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Portions of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on HD at https://www.zacks.com/ap/HD

Comments
"Execs are Worried"! What a joke!
Like these Deviant Republican CEO Prostitutes have anything to worry about? The working family is screwed once again!
trump's fake economy biting America in the ass. Throw another cinder block under your trailers MAGAtards, your world is about to slide into the cesspool. You've betrayed the working man once again!
Here we are T2C (formerly diggerout-penalized by expulsion from this site before for vulgar posts). You are a nut job that throws insults at everyone, especially the President of the United States. I am going to highlight your hypocrisy. Trump is a Wharton School of Business graduate. Where did you graduate from diggerout? Trump has his name on the side of many businesses. How many businesses have your name on the side of them T2C? Trump has decades of international business experience. How much international business experience do you have diggerout? The answer is zero. T2C/diggerout you are a zero. You are a rude dumb bully with a big mouth. You are a zero. President Trump is standing up to China. China needs our money more than we need their cheap products. Our economy is strong as China’s economy is the slowest it has been in 27 years. China has been taking advantage of us for years. Several economic indicators show that Trump is right. China agreed...then they backed out. Now China wants to meet again. President Trump is in the driver’s seat. Watch as things develop. Set your hatred aside. Smart people are working on this. Trump’s consultants are all smart...not a zero, like you.
YTou missed a couple.

Trump's daddy gave him the company and millions of dollars
Trump's daddy got him into Wharton
Trump's daddy got him out of vietnam

Give just about anyone millions of dollars and they will make money. In trumps case he filed for bankruptcy over and over but daddy's money was always there to bail him out.

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