Take a look at what is happening with the consumer.
June 3 (King World News) – Peter Boockvar: Adding to my comments yesterday on the broader impact of steel and aluminum tariffs on the users of them as a raw material input, my buddy David Rosenberg had a great stat in his piece yesterday saying “There are 376k steelworkers in the United States and 8.3 million employed in the construction sector.” Just to highlight that one industry that of course uses a lot of steel in its structures. I’ll add one more heavy user of both steel and aluminum, the auto sector. They employ directly about 1 million people in the US according to the BLS but add about another 3.5 million when including those that are in retail, wholesale and repair and maintenance. According to The Aluminum Association, there are about 164,000 workers in the US in aluminum. By the way, the US imports about 40% of its aluminum needs from Canada which has benefited from cheaper hydro energy sources.
With the help of Google Gemini, I found this article from Automotive Dive in a piece back in February talking about the 25% tariff on steel and its impact on the auto sector and price of a car. These stats came from Jay Cushing, a senior bond analyst with Gimme Credit, “A typical car contains about 1,000 pounds of steel with an estimated cost of between $6,000 and $7,000 per vehicle, Cushing said. A 25% tariff on steel could raise the cost of individual vehicles by as much as $1,500.” I guess a 50% tariff means it will raise the average vehicle cost by $3,000? https://www.automotivedive.com/news/tariffs-trump-steel-aluminum-automotive/739872/
With a hat tip to VD, the credit card companies spoke late last week at a Bernstein conference and I went through the transcripts to see what they are saying on the economy and their consumer. Not much different than from their earnings call but of course more timely.
From American Express, on their customer:
“It’s really been consistent. What we’ve seen through May is what we saw through April and what we saw in March and in the first quarter, and so goods and services consistent. Airline, pretty consistent, and we said that was down a little bit. I think lodging gets a little more challenged, but restaurant is still very, very strong. And if you look at the individual segments, international, SME, and US consumer, pretty consistent to the way they are. So, unless something crazy happens in June, I think when we start talking about this in July, we’re going to say, the second quarter pretty much looked just like the first quarter did, FX adjusted, and all that other kind of stuff.”
From MasterCard:
They reported earnings on April 28th, so this view is a month later. “Now, if you include the first three weeks of May, we see exactly the same. So, spending trends have largely been the same, Now, if you look at this a little bit closer and then you’d say, why is that? If you look at the headlines, if you look at the sentiment surveys, and we just saw one yesterday, it was surprisingly positive. So, you see a lot of rhetoric there, and you see a lot of headlines, and it hasn’t really translated into consumer behavior. So, why is that? Because the underlying support of the labor market continues to be there. We still have low unemployment, and we have wage growth that is kind of keeping up with inflation, above inflation. So, purchasing power is solid, which are both key drivers.”
On travel specifically and we know for sure the shifting destination trends internationally away from the US and to other places. “There was also some moderation into the US. This is something that we have seen in some of the headlines, but it’s also true that we’ve seen increases elsewhere, increases in Europe, for example.”
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