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<\/p>\n Email Link<\/p>\n Washington \n Americans are still opening their wallets, with unemployment remaining low and businesses blunting the effects of President Donald Trump\u2019s widespread tariffs.\n <\/p>\n \n But consumers remain skittish over Trump\u2019s erratic trade war, according to recent surveys. Still, they haven\u2019t cut back and consumer prices have remained somewhat tame.\n <\/p>\n \n Businesses have played a key role<\/a> in keeping the economy afloat, despite persistent economic jitters. For instance, companies mostly have not ramped up layoffs to deal with the cost pressures arising from Trump\u2019s tariffs. Unemployment remains low at 4.2%<\/a>, and if Americans have a job, then they\u2019re able to spend and save.\n <\/p>\n \n Companies have also managed Trump\u2019s confusing onslaught of tariffs through a serious of maneuvers that have, so far, kept inflation from surging; a recent report from the Federal Reserve Bank of Richmond detailed all those strategies.\n <\/p>\n \n After briefly improving from the near-record lows in the spring, consumer sentiment went into reverse again this month, the University of Michigan said Friday. But that might not mean anything for spending, since sentiment has been a lousy predictor of purchasing behavior in recent years.\n <\/p>\n \n Put together, this has allowed consumers to continue to power the US economy with their spending, which contributes about 70% of economic output (though there are signs of caution on how long this resilience can last.)\n <\/p>\n \n \u201cAs long as consumer spending holds up and companies are able to retain workers because of that robust spending, the flywheel can continue to spin, pushing corporate profits and stock prices higher,\u201d Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in commentary issued Friday.\n <\/p>\n \n Since the beginning of the year, Trump has rewritten US trade policy, with a new wave of tariffs that went into earlier this month.<\/a> Businesses have scrambled to deal with the fallout.\n <\/p>\n \n Economists have long said that tariffs will likely stoke consumer inflation, but so far, that hasn\u2019t happened. That might be because of how businesses have handled the situation, according to a recent analysis from the Richmond Fed that looked at survey responses from businesses.\n <\/p>\n \n The report said that businesses have delayed ordering inventories, delayed the timing of when a tariff is charged and negotiated partnerships with suppliers and customers to share costs. Many businesses also stocked up on inventories in the beginning of the year to avoid tariff-induced sticker shock.\n <\/p>\n \n And fortunately for the American worker, one of those strategies hasn\u2019t been to trim headcount. New applications for unemployment benefits remain low, according to Labor Department data.\n <\/p>\n \n That\u2019s done the trick in keeping a lid on consumer inflation, but it might not last for much longer. The latest Producer Price Index, which measures the prices businesses pay their suppliers, surged 0.9% in July from the prior month, lifting the annual rate to 3.3%. The monthly and annual figures both rose much more than economists had expected.\n <\/p>\n
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