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.
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
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
If consumers are to keep fueling economic growth, they
might need reassurance that Trump won't escalate his
"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
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
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
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.