Washington Edition: Tariffs and consumer confidence ~ ⛾:Kaffibolla

This is Washington Edition, the newsletter about money, power and politics in the nation's capital. Today, US economy editor Molly Smith looks at what's behind the jump in consumer confidence. Sign up here and follow us at @bpolitics. Email our editors here.

Bounce Back

One step back in trade policy, two steps forward in consumer confidence... at least for now.

Consumer confidence jumped this month by the most in four years, with half of responses coming in after the May 12 temporary tariff agreement between the US and China. While respondents were more upbeat about the outlook for business conditions, the job market and their incomes, economists took the figures with a heavy grain of salt.

Confidence has been on a downward slide since President Donald Trump took office in January, with consumers especially sensitive to the potential of a years' long cost-of-living crisis being exacerbated by his sweeping tariffs on imported goods. In April, after Trump announced his "Liberation Day" tariffs, it hit a low not seen since the early days of the pandemic.

In Tuesday's survey from The Conference Board, consumers said they were far more anxious about the affordability of things they want or need compared to job security.

"Even after the bounce, confidence remains near the low-end of the recent range and further improvement may depend upon continued deescalation of trade hostilities," Wells Fargo economists said in a note titled "Not Optimistic, but Less Pessimistic."

Therein lies the threat for next month's confidence numbers, and other readings to follow. The cutoff date for responses to this report was May 19, which was a few days before Trump threatened tariffs on the EU and smartphones in June.

The next check on the consumer comes Friday, with the final May sentiment reading from the University of Michigan. That index has been similarly negative in recent months due to tariffs, yet neither has been matched so far by a marked dropoff in consumer spending. What's more, official statistics show inflation has been tame in recent months, despite heightened consumer price expectations in both surveys.

That brings about an important question in evaluating the importance of consumer attitudes — do they really matter for the US economy? — Molly Smith

Don't Miss

Secretary of State Marco Rubio ordered US embassies worldwide to stop scheduling interviews for student visas as the Trump administration weighs stricter vetting of applicants' social-media profiles.

The Trump administration is moving to cancel all remaining federal contracts with Harvard University, marking the latest escalation of its battle against the oldest and richest US school.

The administration also vowed to expand its probes of higher education beyond Ivy League institutions to other schools — including the University of California system.

The US government is poised to receive a so-called golden share in US Steel as a condition for approving Nippon Steel's proposed acquisition of the American company.

Trump warned Russian leader Vladimir Putin that he is "playing with fire," as the US weighs whether to target Moscow with additional sanctions over its long-range missile and drone barrage against Ukraine.

The president threatened to withhold federal funding from California, accusing Governor Gavin Newsom of not complying with an executive order barring transgender people from competing in women's sports.

Homeland Security Secretary Kristi Noem urged Poles to vote for the nationalist opposition candidate, wading into a campaign that threatens to derail efforts to rebuild the country's democratic institutions.

Orders placed with factories for business equipment declined in April by the most since October, suggesting a diminishing appetite to invest amid uncertainty about tariffs and tax policy.

Trump Media, the company behind Truth Social, agreed to sell around $1.5 billion in stock and $1 billion in convertible bonds to buy Bitcoin for its treasury.

Health and Human Services Secretary Robert F. Kennedy Jr. said the Covid shot has been taken off of the recommended vaccine list for healthy children and pregnant women.

The Supreme Court cleared a major obstacle to construction of North America's largest copper mine, rejecting an appeal by a Native American group that said the Arizona project will destroy a sacred area.

The high court also rejected an appeal from a public middle school student who said his free speech rights were violated when his principal barred him from wearing a T-shirt saying "there are only two genders."

Brian Quintenz, the crypto lobbyist Trump nominated to serve as chair of the Commodity Futures Trading Commission, disclosed assets worth at least $3.4 million and positions in key industry groups.

A massive tax-and-spending bill passed by the House last week marks the culmination of nearly two decades of efforts to decisively wean the US off cheap Chinese solar panels.

Watch & Listen

Today on Bloomberg Television's Balance of Power early edition at 1 p.m., hosts Joe Mathieu and Kailey Leinz interviewed Ben Jensen, senior fellow for the Defense and Security Department at the Center for Strategic and International Studies, about the rising tension between Trump and Vladimir Putin.

On the program at 5 p.m., they talk with Stephen Miran, chair of the White House Council of Economic Advisers, about the outlook for trade talks between the US and the European Union.

On the Big Take podcast, Bloomberg's Ben Steverman visits a beauty convention and talks to masseuses and hair stylists about the trends they're seeing in their salons and what that tells us about the state of the US economy. Listen on iHeart, Apple Podcasts and Spotify.

Can't Look Away: Join us for a screening on June 3 at the Johns Hopkins University Bloomberg Center in Washington, DC, of Can't Look Away, a documentary based on investigative reporting by Bloomberg News' Olivia Carville. Directors Matthew O'Neill and Perri Peltz take viewers inside the high-stakes battle to hold social media companies accountable for the harm inflicted on young users. Register here.

Chart of the Day

Much has been written about travelers from abroad snubbing the US amid growing political tension around the Trump administration's tariffs, but Americans' intentions to vacation abroad remain relatively strong. Roughly one-in-six respondents to a survey conducted by the Conference Board plan to take a foreign vacation within the next six months. That's about the same as 2 years ago and much higher than pre-pandemic levels despite some recent volatility. According to the survey, there were some "significant gains after May 12" when the US and China paused some of the higher tariffs on each other and consumers became less pessimistic about business conditions. — Alex Tanzi

What's Next

Minutes of the Federal Reserve's May meeting will be released tomorrow.

The second estimate for first quarter GDP will be released at 8:30 a.m. Thursday.

Initial jobless claims for the week ending May 24 will be reported Thursday.

Pending home sales for April will be released on Thursday.

The personal consumption expenditures index for April is out on Friday.

The University of Michigan's final read of consumer sentiment for May also will be released on Friday.

Construction spending and factory orders in April will be reported on June 2.

Job openings and layoffs for April will be released June 3.

Total vehicle sales in May will be reported on June 3.

The US trade balance for April will be released on June 5.

The jobs report for for May will be released June 6.

Seen Elsewhere

Four British men scaled Mount Everest in less than a week by using xenon gas to speed high-altitude acclamation, raising questions about the use of a performance enhancer to achieve the feat, the New York Times reports.
An increasing number of states are subsidizing satellite Internet connections in rural areas, a potential boon to Elon Musk's Starlink and a similar service from Amazon, according to the Wall Street Journal.
Groundwater in the Colorado River Basin, which covers seven western states, is being depleted at a rapid rate at a time when river reservoirs are already under strain, the Los Angeles Times reports.

⛾:Kaffibolla

Tuesday, May 27, 2025