By Rachel Louise Ensign

Kyle Brooks is so dismayed by the Trump administration's policies that he is looking into moving to another country. He is also worried that federal cuts will keep weighing on business at the high-end Washington, D.C., restaurant where he works as a manager.

But those concerns haven't prompted him to spend less. "I haven't really traded down in anything yet," the 30-year-old Brooks said.

Americans are feeling gloomy about the economy after President Trump's market-rattling first few months in office. But overall they are spending even more than before, which is keeping the economy humming -- for now.

Retail sales surged 1.4% in March from a month earlier, the Commerce Department said earlier this month. While car sales posted a big jump, sales were up at restaurants and clothing stores, too. Those figures are from before Trump's April 2 announcement of widespread tariffs, though the administration later paused some of those levies.

Other data shows that overall spending growth continued after the tariff announcement, even as consumers made some big changes to what they were buying. Spending on airlines was down more than 13% during the week ended April 19 compared with a year earlier, while online electronics sales were up 7.5%, an analysis of Bank of America debit- and credit-card spending found. In all, total card spending at the bank rose 3.1%.

The affluent people who have been powering the economy of late are still spending, buoyed by wage growth, said Liz Everett Krisberg, head of the Bank of America Institute. Spending by the top 5% of customers grew about 3%, suggesting that big declines in their stock portfolios haven't made them skittish about making purchases.

That data is surprising because the mood among American consumers and businesses has markedly deteriorated this year. On Friday, the University of Michigan reported that its index of consumer sentiment dropped sharply lower in April from the previous month.

The Conference Board, a business-research group, reported last month that its overall index of consumer confidence fell sharply in March. Its measure of future expectations dropped to the lowest level in 12 years.

The big question is if and when those feelings will lead consumers to pull back. It doesn't always happen. The Michigan sentiment index, for example, fell sharply from the middle of 2021 to the middle of 2022, when inflation was soaring. Yet while Americans felt bad about the economy, they kept spending.

"We're really struggling to wrap our heads around it. You're having these surveys showing sentiment going in one direction and spending not necessarily following," Everett Krisberg said.

Retired manufacturing executive Walt Robertson, 79, doesn't see any signs of a downturn in his South Carolina community. "I live on Hilton Head Island. You can't get a tee time, you can't get a dinner reservation," he said.

His friends are spending freely too. "You go to dinner at any of our favorite places, it's a couple hundred bucks, and no one cares," Robertson said.

How people feel about the economy can depend greatly on whether their preferred candidate is in the White House. Democrats started feeling a lot more morose about the economy after Trump was elected in November; Republicans got a lot more cheerful.

Robertson said his son is concerned about how expensive everything is after the recent run of inflation. But Robertson is excited about the tariffs and their potential to bring manufacturing jobs back to the country.

Economists say there is a good chance that a slowdown is imminent. People who are spending more now to get ahead of tariff-related price increases might spend less in the future.

Inflation-adjusted consumer spending, which is measured by the Commerce Department, was up only 0.1% in February, the latest figure available.

"Consumers are on the economic ledge, and they want to be talked back," said Mark Zandi, chief economist at Moody's. "More likely, they're going to be pushed over by the higher prices and weaker stock prices."

Companies are bracing for tougher times. Kimberly-Clark, which makes Huggies diapers and Kleenex tissues, said this past week that customers across income levels are hunting for value when buying essentials. American Airlines said domestic travel demand declined and withdrew its full-year guidance.

And companies across the spectrum -- including Birkin handbag maker Hermès -- are planning to raise some prices on customers to deal with tariffs. That could make many Americans, who are already struggling with the higher prices of the past few years, shut their wallets.

Brooks, the Washington restaurant manager, is thinking about cutting back -- in the future. He might buy less wine. And he might hold off on continuing-education courses if his income drops.

Alicia Logan, a 52-year-old married Pennsylvania mom of three who works in marketing, watched her investment accounts fall over the past few weeks. She was already feeling afraid for the direction of the country after Trump's attacks on the judiciary and revelations that high-ranking officials discussed sensitive information in a Signal chat.

She has pulled back on Amazon.com purchases for her family. But they also bought a used car, worried that prices would go up if they waited. Taken together, they are probably spending about the same as before, Logan said.

"We're lucky we have good jobs," Logan said. "But for the first time in my life, I have felt legitimately scared."

Write to Rachel Louise Ensign at Rachel.Ensign@wsj.com

(END) Dow Jones Newswires

April 25, 2025 21:00 ET (01:00 GMT)

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