It is difficult to predict the impact of new tariffs and policies on the U.S. economy and anxiety and confusion have taken "center stage" in the economy, according to the National Retail Federation.
"This year began with high expectations for the strength of the U.S. economy," NRF Chief Economist Kleinhenz said in a press release, noting strong 2.8% year-over-year growth in gross domestic product in 2024 that was led by consumer spending and helped by business and government spending. "Since then, anxiety and confusion have taken center stage in the economy and financial markets as uncertainty over public policy has intensified. It was difficult to judge how policy changes would impact the economy in early 2025 and it remains so now."
Kleinhenz's comments were published in the July edition of NRF's Monthly Economic Review, which reported "economic growth is holding up relatively well" so far this year despite uncertainty about the future.
The labor market is performing better than expected, with employers adding 147,000 jobs in June, just above the monthly average of 146,000 over the past year, according to NRF.
"However, if the large increases in tariffs announced earlier this year take effect and are sustained, they will infiltrate consumer prices, causing a downshift in spending that is likely to spill over into the labor market later in the year with higher unemployment," Kleinhenz said.
Tariff timeline: White House actions, declarations, reversalsRetailers concerned about tariffs, low supply chain confidenceConsumers changing grocery spend due to tariffs, inflation