US consumers are just months away from a cash crunch as tax refunds from the Trump administration run out and surging fuel costs from the Iran war cascade through the economy, executives and economists warn.
Generous tax refunds from President Donald Trump’s landmark budget legislation, averaging nearly $3,500 per return according to the IRS, have allowed Americans to continue splashing out. But retailers are bracing for a petrol-price-fuelled pullback that could cause growth to slow as soon as this summer in the world’s largest economy.
“The tax refunds have been largely erased by the increase in Middle East price pressures,” said Gregory Daco, chief economist at EY Parthenon. “The longer the conflict lasts, the more we move to an adverse scenario where inflation proves more persistent and erodes consumer spending growth.”