Have any impacts from Tariff-palooza! shown up in hard data yet?
– by New Deal democrat
A few days ago, Prof. Menzie Chinn at Econbrowser posted the below graphs comparing the time that hard vs. soft data reacted to economic shocks:
As you know, I have been looking at hard “high frequency” data to see if any of the effects of Tariff-palooza! have shown up yet.
And so far, the signs are meager.
Here is this morning’s update of consumer retail spending YoY from Redbook:
In the last week, it has slowed down to a 5.4% increase YoY, about average for the past 12 months.
And I won’t even bother with the graph of restaurant reservations, one of the easiest things for consumers to cut back on. Suffice it to say that they are up about 8% YoY.
If consumers aren’t cutting back on their discretionary spending, what about effects on the supply side?
Here is the latest graph from the AAR of rail traffic for the week of May 10, showing both the comparison of the same week YoY, and cumulatively this year so far vs. 2024:
The only sign of weakness here is that at the beginning of April cumulative 2025 intermodal traffic was higher by 8.7% YoY. Since then, almost every week that number has declined, such that last week it was only up 7.9%.
And what about shipping? A month ago there was a flurry of reporting about collapsing inbound ship traffic. So, I have been paying attention to the weekly inbound numbers for the Port of Los Angeles.
Here’s what the last 7 weeks look like in TEU volumes:
WEEK. 2025. 2024
4/26. 119.8. 76.8
5/3. 85.5. 95.5
5/10. 74.9. 111.4
5/17. 86.6. 98.6
5/24. 103.1. 66.0
5/31. 60.8. 91.9
6/7. 96.1. 98.9
TOTAL 626.8 638 (-1.9%)
Ex-4/26 507.0. 562.0 (-9.8%)
Note that the traffic that arrived during the week of April 26 probably started its journey before “Liberation Day,” which is why I included the second figure. But even so, while there has been a decline, it has not been as drastic as first reported.
And Wall Street has rebounded sharply on the “TACO” trade, which stands for “T—-p Always Chickens Out”:
As of the close yesterday, the S&P 500 was only down -2.9% from its all time high.
The bottom line is that so far almost no hard data is reflecting an impact from Tariff-palooza! – at least, not yet.
Real retail sales turn down in April, but continue to reflect consumers’ front-running of tariffs – Angry Bear by New Deal democrat
Working in supply chain for an extremely large retailer whose name does not begin with “A” as I do, I suspect that the impact of the tariffs won’t really be evident in the data until July, possibly somewhat in June, and then only if Trump doesn’t cave completely before then. A surprising number of our overseas-sourced items have lead times in excess of 20 weeks – we get lower prices that way, among other things – and cancelling an order that’s due in, say, eight weeks isn’t a good thing to do for supplier relationships. Given the time necessary to formulate a policy response to Liberation Day, the delay between order receipt at a port and the goods making it to the store, and, say, a 13-week minimum cancellation horizon, we’re at the end of July for shortages on a lot of import stuff.
As for price increases, purchased goods with increased costs due to tariffs might take a couple of months to reach the stores, meaning early June, and the pricing response isn’t likely to be immediate. Firms will hold on, hoping Trump caves, in which case they’ll just absorb most of the cost increase impact from, e.g., three months (April – June) of higher costs. This takes us to the end of June or early July.
Note that I’m not using any proprietary knowledge about the details of our response to tariffs in this post, just my somewhat extensive knowledge of our supply chains. So, maybe three cents worth!
Of course, “fresh” food items like bananas are different, as there’s a far, far shorter lead time involved… was thinking of general merchandise (“dry goods”) and overlooked this extremely important segment of retail.
Still waiting for parts to fix my Mini after a tree fell on it ten weeks ago …
It’s a bit early for tariff related price increases. I’d expect 60-90 days before the buffer starts running low, and then a bit longer as companies try to decide on tariff strategy. Bloomberg has the multinationals spreading the tariff costs to subsidiaries world wide, so there may or may not be a US only effect. Worse, there has been background inflation going on for over five years now, and with so many industries dominated by oligopolies, it’s hard to tell tariff price increases from routine greed or supply cost inflation. One thing is certain, we won’t be seeing that wage-price inflation cycle. Labor has no pricing power.