Retailers and airlines report slowing sales as tariffs, inflation, and uncertainty reshape the US economy
Corporate leaders from major US retailers and airlines are reporting weakening consumer demand, according to CNBC.
This shift follows years of resilience despite persistent inflation and high interest rates.
Retailers and other consumer-facing businesses noted that first-quarter sales were below expectations and warned of potential challenges throughout the year.
The economic outlook has grown more uncertain with the introduction of new tariffs under US President Donald Trump's administration, alongside concerns over government layoffs and declining consumer sentiment.
Economists expect these tariffs on goods from China, Canada, and Mexico to increase prices and curb consumer spending.
The Wall Street Journal reported that the University of Michigan's US consumer sentiment index dropped 11 percent to 57.9 in mid-March, marking a continued decline since February.
In February, US consumer confidence also saw its sharpest decline since 2021, and a separate sentiment measure in March also fell below expectations.
Air travel, which had remained a strong sector post-pandemic, is showing signs of a slowdown.
The CEOs of United, American, Delta, and Southwest all reported weaker demand, leading to cuts in first-quarter forecasts.
Delta CEO Ed Bastian told CNBC that declining consumer confidence had impacted both leisure and business travel.
United CEO Scott Kirby highlighted a drop in government-related travel, which has affected overall demand.
Stock markets have responded negatively to these trends.
The S&P 500 dropped 10 percent from its February highs before recovering some ground. Investors and executives have expressed concerns about how tariffs will impact consumer spending and business planning.
Walmart, a key player in the US retail sector, has warned of slower profit growth despite its success in attracting higher-income consumers.
CFO John David Rainey emphasized the company's cautious outlook, stating that economic uncertainty necessitates a measured approach.
Other retailers, including Dick’s Sporting Goods, E.l.f. Beauty, and Abercrombie & Fitch, also revised their forecasts downward.
Budget-conscious consumers are feeling the strain of ongoing inflation. Dollar General CEO Todd Vasos reported that many customers are struggling to afford even basic necessities.
Similarly, American Eagle noted that consumer uncertainty, coupled with colder weather, led to weaker-than-expected sales at the beginning of the year.
