Strong consumption covers up the signs of crisis, the US economy may face a cliff-like decline.

Despite an increasing number of American people feeling worried about the economic outlook, their consumer behavior has not significantly tightened. According to a recent online survey conducted by foreign media and SurveyMonkey, about 73% of American adults said they are facing "financial pressure," with most blaming it on the escalating trade wars. However, data shows that the consumer market is still performing strongly. Part of the reason is that consumers are starting to engage in "panic buying" to address potential risks of increased taxes. The U.S. Department of Commerce data shows that consumer spending in March exceeded expectations, and the latest data released by J.P. Morgan on Wednesday shows that consumer spending continued to grow in April. As a result, J.P. Morgan has raised the probability of the U.S. and global economies entering a recession by the end of the year from 40% to 60%. Consumer spending is an important pillar of the U.S. economy, accounting for a significant proportion of the Gross Domestic Product and driving overall economic growth. Federal Reserve Chairman Jerome Powell pointed out earlier this month at a business news conference in Arlington, Virginia: "The U.S. economy is mainly driven by consumption." He also stated that President Trump's tariff policy may push up inflation and weaken economic growth. Most economists agree that amidst rising prices of many consumer goods, the tariff policy is exacerbating the decline in consumer confidence, which is often a crucial indicator of economic trends. Data shows that the "Consumer Confidence Expectations Index," which measures consumers' short-term expectations, has dropped to its lowest level in 12 years, well below the recession warning line. The University of Michigan's consumer survey also shows that since December last year, consumer confidence has plummeted by over 30%, fueled by concerns about the escalating trade war. Chief economist of the National Retail Federation, Jack Kleinhenz, stated in a release, "The fluctuating tariff policies and the resulting market and global economic turmoil are significantly affecting consumer concerns about rising prices and future consumption growth." Currently, the tariffs imposed by the U.S. government on several countries are in a 90-day "pause phase," with a uniform 10% baseline tariff rate on all imported goods, a policy set to expire on July 9. The Trump administration is negotiating with leaders of various countries on new tariff rates. According to analysis by the Urban-Brookings Tax Policy Center, if the current lower tariff rates are maintained in the long term, the average taxpayer's real income is expected to decrease by around $3,100 by 2026. An independent study by Yale University's Budget Lab suggests that tariffs may cost the average American family about $3,800 more each year. Greg McBride, Chief Financial Analyst at Bankrate, stated, "Household budgets are already under pressure, and if prices continue to rise, consumers will be extremely sensitive. Inflation levels will continue to dominate people's assessment of their financial situation and affect whether they are willing to increase spending." Sasha Indarte, Assistant Professor in the Finance Department at the Wharton School of the University of Pennsylvania, warned that financial pressure and expectations of economic weakness will eventually force consumers to reduce spending, which in turn will prompt businesses to cut back on investments or even lay off workers, creating a typical "self-fulfilling" economic recession. "Even if initially only a small cut in spending is made, it will be continuously amplified," Indarte explained. "One person's consumption is another person's income, and this effect will reverberate throughout the entire economic system." However, she also pointed out that traditional economic theories cannot explain all phenomena. Even if consumers intend to cut spending, they often do not significantly reduce expenses as expected behavioral bias and inertia play a crucial role. "Even as the external environment changes, we tend to maintain our existing consumption patterns. People are used to going to the same restaurants, driving the same cars, and are reluctant to make adjustments," Indarte said. "We have a preference for 'maintaining the status quo.'" But once household budgets reach their limits, consumers will no longer be able to maintain their current lifestyles, and that moment will mark the true beginning of the economic impact. At that time, whether willing or not, consumers will be forced to "tighten their belts." Analysts at J.P. Morgan expressed similar views in a research report on Wednesday, and Federal Reserve Bank of Chicago President Charles Evans also expressed concern in a speech last Sunday. Indarte concluded, "We should indeed start worrying."