More on the US consumer and their spending behavior

Ahead of the payroll report and before I go over some earnings calls from some consumer touching businesses, here were some regional Beige Book comments on retail spending from the report on Wednesday. Sounds pretty muted.

Boston: "First District restaurant sales and retail sales slowed modestly in recent months, while tourism activity was flat. A Massachusetts restaurant industry contact said that, following a very slow winter season, April's sales remained depressed relative to one year earlier, while May's sales so far came closer to last May's levels. A clothing retailer experienced flat sales overall in recent months. A discount retailer reported a modest decline in sales overall, driven by substantial declines at stores along the Canadian border. Airline passenger traffic through Boston increased modestly, with most of the growth coming from international travel. The hotel occupancy rate in greater Boston dropped slightly from a year earlier but remained strong compared with long-run averages. Restaurant contacts remained cautious about the outlook but gained some optimism based on recent activity."

NY: "On balance, consumer spending continued to rise modestly through much of the District. Auto dealers in upstate New York reported that inventories were depleted by ongoing strong sales as customers tried to get ahead of potential tariffs. Used car sales were mostly solid, though inventory availability was sometimes limiting. Restaurant traffic picked up around New York City, especially in Brooklyn. However, ongoing reductions in visits from Canadian tourists contributed to a decline in spending in the North Country as well as a decline in sales at an upstate brewery."

Philly: "Retailers (nonauto) reported a slight decline in sales over the current period. One retailer stated that customers are overly burdened by higher prices and that in-store visits continue to be flat to slightly down despite the extensive use of promotions. Auto dealers reported a slight decline in auto sales, after strong increases in the last period. Although tariffs have yet to affect auto prices, prices have still been trending up partly owing to lower inventories on hand. Activity in the tourism sector rose slightly, unchanged from the last period. Leisure travel rose moderately despite minor dips in hotel bookings and air travel."

Cleveland: "In recent weeks, consumer spending was flat on balance. Many auto dealers reported an increase in purchases ahead of planned tariffs, and one dealership expected tariff-related sticker shock to hit customer demand starting in early June. Retailers reported a general pullback in consumer discretionary spending, although one retailer benefited from customers who traded down from larger discretionary purchases to more modest ones. Contacts had difficulty forecasting demand for the coming months because of uncertain impacts of trade policy but expected demand to see a modest slowdown on net during this period."

Richmond: "Consumer spending increased slightly in recent weeks. Most retailers reported steady to increasing sales, overall, but noted a decline in big ticket purchases. Several contacts mentioned that consumers continued to be price sensitive and were opting for lower priced alternatives. Similarly, hospitality contacts saw an overall increase in activity and shifts in consumer preferences towards budget hotels and quick service restaurants. At the same time, some luxury retailers, hotels, and experience providers reported strong sales. Despite recent increases in activity, many contacts expected sales to slow in the coming months and pointed to declining consumer sentiment, potentially higher prices, and heightened uncertainty as potential headwinds."

Atlanta: "Consumer spending was little changed since the previous report. Some retailers noted a modest spike in durables sales, particularly big-ticket items such as autos, as consumers rushed to front run tariffs. Overall, however, retailers noted some evidence of softening consumer demand that is expected to dampen future sales. Some retailers noted they were still working through previously acquired inventories and thus had not raised prices. However, they believe that consumer price sensitivity will remain high and expect a drop in sales when tariff-related price increases are enacted."

"Travel and tourism activity, including hotel bookings, declined modestly. Room rates were flat or rose slightly, and some hotels offered increased incentives such as an additional night free. Contacts reported a slowing of international travelers to the U.S., and while previously concentrated among Canadian visitors, the slowdown recently expanded to visitors from Asia and Europe. Domestic leisure travel was flat. Declining consumer confidence slowed leisure travel for lower income consumers but also caused more higher-income Americans to vacation in the U.S. instead of abroad."