U.S. Consumer Spending Trends Amid Tariff-Powered Economic Volatility

Consumer spending in the United States experienced marginal growth in April, with households choosing to save more amidst economic unpredictability fueled by fluctuating tariffs. According to the Commerce Department's report, the nation's economy faced challenges in rebounding at the start of the second quarter following its first contraction in three years during the January-March period.

Despite muted inflation in April, economists expect future tariff hikes could elevate costs, potentially dissuading the Federal Reserve from further reducing interest rates soon. The legal landscape concerning tariffs remains tangled; a U.S. trade court initially blocked most of President Trump's import duties, though they were briefly reinstated by an appeals court, clouding the economic outlook.

Economists remain divided on the growth trajectory, citing aggressive trade policies that might stifle economic progress and boost inflation. However, a notable contraction in the trade deficit could counteract some negative impacts, providing a potential lift to the GDP in the upcoming quarter. Financial markets anticipate a return to rate cuts by the Federal Reserve in September.

(With inputs from agencies.)