Swonk on Tariffs: We’ve Seen a Major Deterioration in Consumer Confidence

RUSH EXCERPT RADDATZ I ░░░░░░░░ joined by Diane Swonk ░░░░░░░░ economist and managing director ░░░░░░░░ the accounting firm KPMG ░░░░░░░░ s great to see ░░░░░░░░ this morning Diane these ░░░░░░░░ slated to be the ░░░░░░░░ significant rounds of tariffs ░░░░░░░░ The president calls it ░░░░░░░░ day There s already ░░░░░░░░ with the markets tumbling ░░░░░░░░ Friday after some gains ░░░░░░░░ what are you seeing ░░░░░░░░ Well what we re ░░░░░░░░ is we ve seen ░░░░░░░░ are already very concerned ░░░░░░░░ this and there s ░░░░░░░░ hunkering down behavior even ░░░░░░░░ Federal Reserve s beige ░░░░░░░░ which sort of looks ░░░░░░░░ economic conditions across the ░░░░░░░░ there are not only ░░░░░░░░ of people front running ░░░░░░░░ trying to produce and ░░░░░░░░ ahead of tariffs but ░░░░░░░░ increases in price and ░░░░░░░░ intention to pass them ░░░░░░░░ to consumers which is ░░░░░░░░ consumers are not very ░░░░░░░░ at the moment What ░░░░░░░░ re also concerned about ░░░░░░░░ what employment is looking ░░░░░░░░ because we ve had ░░░░░░░░ consumer surveys now One ░░░░░░░░ a conference board one ░░░░░░░░ the University of Michigan ░░░░░░░░ survey and they both ░░░░░░░░ an increase in inflation ░░░░░░░░ and a deterioration in ░░░░░░░░ expectations and job security ░░░░░░░░ s a very worrisome ░░░░░░░░ It has that flavor ░░░░░░░░ stagflation to it a ░░░░░░░░ bout of stagflation RADDATZ ░░░░░░░░ is the outlook because ░░░░░░░░ that for consumers What ░░░░░░░░ they be thinking SWONK ░░░░░░░░ we ve seen across ░░░░░░░░ income group every age ░░░░░░░░ demographic every wealth strata ░░░░░░░░ every party affiliation a ░░░░░░░░ deterioration in consumer confidence ░░░░░░░░ the wealthiest households which ░░░░░░░░ account for a disproportionate ░░░░░░░░ of overall spending they ░░░░░░░░ starting to say that ░░░░░░░░ are not confident in ░░░░░░░░ economy and their future ░░░░░░░░ That s very important ░░░░░░░░ they account for almost ░░░░░░░░ 10 of households of ░░░░░░░░ spending in the U ░░░░░░░░ economy which speaks to ░░░░░░░░ the inequality that we ░░░░░░░░ already seeing in the ░░░░░░░░ S economy which is ░░░░░░░░ stark And that s ░░░░░░░░ we worry about tariffs ░░░░░░░░ tariffs are a regressive ░░░░░░░░ They hit those with ░░░░░░░░ and middle incomes much ░░░░░░░░ than higher incomes but ░░░░░░░░ among the highest income ░░░░░░░░ you re seeing a ░░░░░░░░ And on days when ░░░░░░░░ see the stock market ░░░░░░░░ down you can literally ░░░░░░░░ almost in real time ░░░░░░░░ at luxury goods stores ░░░░░░░░ back and I think ░░░░░░░░ s important to remember ░░░░░░░░ well RADDATZ And Diane ░░░░░░░░ on the 25 tariffs ░░░░░░░░ cars and car parts ░░░░░░░░ outside the U S ░░░░░░░░ said prices will go ░░░░░░░░ because it will incentivize ░░░░░░░░ to build in the ░░░░░░░░ S Do you agree ░░░░░░░░ The economics does not ░░░░░░░░ that at all and ░░░░░░░░ m not alone It ░░░░░░░░ the economic consensus that ░░░░░░░░ in fact car prices ░░░░░░░░ go up And what ░░░░░░░░ tend to see is ░░░░░░░░ of it will be ░░░░░░░░ in margins and some ░░░░░░░░ it will show up ░░░░░░░░ layoffs as higher costs ░░░░░░░░ up in terms of ░░░░░░░░ but it s just ░░░░░░░░ hard to find things ░░░░░░░░ are solely produced in ░░░░░░░░ United States and even ░░░░░░░░ carmakers that are most ░░░░░░░░ from tariffs do get ░░░░░░░░ kind of parts from ░░░░░░░░ or steel that is ░░░░░░░░ to increase the cost ░░░░░░░░ that vehicle Another important ░░░░░░░░ is the uncertainty of ░░░░░░░░ via executive order They ░░░░░░░░ literally change with you ░░░░░░░░ a pen stroke Because ░░░░░░░░ that there s no ░░░░░░░░ on how long they ░░░░░░░░ actually last and that ░░░░░░░░ important when you re ░░░░░░░░ about building a plant ░░░░░░░░ bringing production back that ░░░░░░░░ three to five years ░░░░░░░░ do And then you ░░░░░░░░ to have the workers ░░░░░░░░ be able to work ░░░░░░░░ it That s not ░░░░░░░░ easy commitment to make ░░░░░░░░ you don t know ░░░░░░░░ the future is actually ░░░░░░░░ to hold with regard ░░░░░░░░ tariffs.”