US economy defies tariff fears, consumers resume spending

Despite fears that spring tariffs would derail the US economy, growth remains steady and consumer confidence is returning. 

After a sharp drop in the S&P 500 and consumer sentiment earlier this year, retail sales rebounded in June, and inflation hasn’t surged as many had expected.

Spending rebounds, recession fears fade
Shoppers and businesses that once paused purchases are now spending again. Credit card spending rose 7% at major banks, and financial institutions no longer forecast an imminent recession.

In a July survey of 1,267 small-business owners, 44% reported their demand is higher than what was expected in January. A third of them are planning to hire in the coming months.

Some sectors are still cautious. Manufacturing activity has contracted, and tariff-sensitive goods like clothing and furniture have seen price increases.

However, job cuts remain limited, and unemployment stays historically low at 4.1%.

Consumers choose to move forward 
Many who once held back are now traveling, investing, or upgrading major purchases. Inflation expectations have dropped from 6.6% in April to 4.4% in July.

Though tariff impacts may still unfold, consumers and companies alike are adapting and moving forward, signaling cautious optimism across the economy.