Financial FAQs
“Advance estimates of U.S. retail and food services sales for August 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $732.0 billion, up 0.6 percent (±0.4 percent) from the previous month, and up 5.0 percent (±0.5 percent) from August 2024.” Census.gov
The financial markets rallied because the US Census Bureau’s August retail sales report showed consumers were still shopping and might save the holiday season for retailers. But it couldn’t hide the damage from the tariff wars.
The FRED graph of retail sales shows the huge monthly fluctuations in sales due to the tariff uncertainty. January retail sales (i.e., when Trump was sworn in) plunged 1%. In March it rose 1.3% to get ahead of Trump’s April 2 retaliatory tariffs. Then it plunged for two more months before Trump announced the 90-day reprieve, after which it rose 1% before beginning the monthly sales decline to 0.6% in August.
And retail sales are reported without inflation factored in as I highlighted above. Today’s inflation rate is 3% and climbing, so ‘real’ retail sales on average have been increasing just 2%. And this must be in large part because of the decline in the number of shoppers.
The latest unemployment report showed there has been a -313,000 decline year-over-year in the working population mostly thanks to the ICE roundup of undocumented immigrants. Although less than 100,000 undocumented immigrants have been incarcerated by ICE, there are millions more hiding in their homes or elsewhere to avoid being arrested.
Also factor in the job decline from the Bureau of Labor Statistics (BLS). The economy created half as many new jobs from early 2024 to early 2025 in its national benchmark reassessment of the job market—a loss of -991,000 jobs—amounting to about 71,000 new jobs a month instead of the previously reported 147,000.
This decline will eventually figure into economic growth as well, since consumers power two-thirds of GDP growth.
The financial markets are in a relief rally because the tariffs (i.e., import taxes) aren’t yet stopping consumers from shopping and eating. New car and car parts sales increased in August for the third month in a row. Car shoppers have been buying more vehicles than usual for the past several months to avoid anticipated price increases in the coming months as tariffs take full effect.
Americans have also spent more on certain items that are heavily imported, such as coffee and car parts, whose prices have risen (coffee prices are up 15%, thanks in part to Trump’s 50% tariffs in Brazilian imports).
Another critical category, restaurant sales, advanced 0.7% last month. Overall restaurant spending is up 6.6% in the past three months compared with the same three-month period one year ago.
People buy more prepared food when they are confident in the economy. They eat out less when they are anxious about their jobs, according to MarketWatch’s Jeffry Bartash, a commentator I like to follow.
Wednesday’s Federal Reserve rate cut could power more consumer spending and higher inflation. Many upper income earners are willing to pay the higher tab, but not the bottom 20 percent of income earners.
And the bottom 20 percenters are in the main Trump supporters. So, I for one hope the Supreme Court disallows many of the tariffs-by-executive order Trump is foisting on the rest of the world. They are counter-productive, since their goal is not really economic. They are tax increases on all Americans to aid in paying down the huge debt incurred from Trump’s gigantic transfer of wealth in his big beautiful tax bill.
So he will use any excuse to levy them. The 50 percent Brazilian tariff is an excellent example, since Brazil imports more from the US than it exports. Trump has said he did it to attempt to influence the outcome of convicted felon buddy Jair Bolsonaro’s trial. It didn’t work, of course, as Bolsonaro is going to jail.
Trump wants to be a dictator, and a major trait of dictators is the accumulation of enormous wealth, not to “lift all boats” as JF Kennedy once said, but their own boats while the rest of US sink.
Harlan Green © 2025
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
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