MW Tariff indigestion? Nope: Takeout and eating out still going strong in good sign for the economy.

By Jeffry Bartash

Americans are anxious about trade wars - but not enough to sharply reduce their spending

Americans say they have little confidence in the economy due to ongoing trade wars. But you'd never know it based on how much they're spending - especially on food and drinks they didn't make themselves.

Household spending slowed sharply in April, to be sure, but it was mostly a tariff-related phenomenon. Americans boosted their spending on cars and other other goods in March to avoid tariff-related price increases, before dialing back in April.

Still, consumer spending is unlikely to accelerate in the months ahead, as legal disputes over tariffs in the U.S. and negotiations with other countries play out.

There's little reason, however, to expect consumer spending to fall off a cliff and raise the chances of a recession. One big clue? How much Americans are spending to dine out or buy takeout.

When the economy sours, one of the first things people cut back on is food made by someone else - a chef at a fancy restaurant, a burger flipper at McDonald's $(MCD)$, or a barista at Starbucks $(SBUX)$.

Americans aren't doing that right now.

A government report on Friday showed a sharp increase in spending on purchased food in April. So did a retail-sales survey for April published earlier this month.

A key barometer of restaurant sales didn't show lots of red flags, either, as online platform OpenTable $(BKNG)$ reported that restaurant reservations in the past week were up about 10% compared to a year earlier.

That's not to say restaurant owners are free of worry. Many are anxious about a slowdown in business because of the ongoing trade wars.

The industry's Washington lobbying group, the National Restaurant Association, said an index it compiles to track the heath of restaurant sales showed a a greater sense of caution ahead of the summer.

"Restaurant operators have a mixed outlook for sales in the coming months, while their expectation for the overall economy continues to lean pessimistic," the NRA reported.

But they might be too pessmistic.

For one thing, President Trump relaxed most tariffs, even before U.S. courts got involved and threatened to undue the new duties. It could be that the worst of the trade wars are over, economists say.

Just as critical, layoffs and unemployment remain low, incomes are rising. inflation has slowed and the economy is still adding jobs.

"The great tariff inflation scare seems to be everywhere except in the data," said Douglas Porter, chief economist of BMO Capital Markets.

Indeed, for all their complaints about the economy, most Americans feel secure in their jobs, and that allows them to keep spending. What they do is more telling than what they say.

The U.S. economy itself also shows scattered signs of righting itself after the first contraction in three years in the first quarter.

Gross domestic product, the official scorecard of the economy, is forecast to grow 3% or more in the second quarter, after shrinking 0.2% in the first three months of 2025, the most recent forecasts show.

A shrinking trade deficit appears to be the biggest positive for GDP, but consumer spending is on track to surpass the meager 1.2% rate of growth in the first quarter.

Consumer spending accounts for about 70% of U.S. economic activity.

-Jeffry Bartash

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May 30, 2025 14:12 ET (18:12 GMT)

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