{"text":[[{"start":12.25,"text":"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."}],[{"start":24.3,"text":"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. "}],[{"start":44.95,"text":"“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.”"}],[{"start":64.45,"text":"Consumers are the engine room of the US economy, accounting for about two-thirds of all economic output. In recent years, they have also been an important driver of growth. "}],[{"start":75,"text":"Robust spending, coupled with hefty investments by tech groups and strong productivity figures, has helped the US economy expand at a faster clip than most developed countries since the pandemic. "}],[{"start":87.2,"text":"“One of the key reasons the economy has remained so resilient to higher interest rates, elevated inflation and repeated shocks in recent years is that households have stayed in solid financial shape, allowing consumers to keep spending even as job and income growth has slowed,” said Brian LeBlanc, head of economic analysis at PNC Bank. "}],[{"start":null,"text":"
"}],[{"start":107.4,"text":"The chunky refunds came as a result of sweeping tax cuts enacted in Trump’s signature budget legislation, the One Big Beautiful Bill Act, which became law in July 2025."}],[{"start":119,"text":"Big-box retailers, such as Walmart and Target, said in earnings calls this week that the refunds had helped buoy sales."}],[{"start":126.45,"text":"Data based on debit and credit card spending by 4mn US households showed continued spending on other goods despite fuel consuming an ever-greater share of income."}],[{"start":137.75,"text":"Lowe’s, the home improvement retailer, still expects to see more spending fuelled by refunds in June, with chief financial officer Brandon Sink betting would-be customers had set some of the funds aside “given the uncertainty”."}],[{"start":150.7,"text":"But as the refunds — which began in February — are spent, some retailers are bracing for fuel prices to consume a larger share of discretionary spending, seeping into other parts of the economy. The price of groceries rose 2.9 per cent in April as elevated diesel costs — now near record levels — make transporting goods more expensive. Fruit and vegetables were up 6.1 per cent. "}],[{"start":174.79999999999998,"text":"Jim Lee, chief financial officer at Target, said the “upside” benefit from the tax refunds “will be fading over the rest of the year” as the costs of the war weighed on US households. "}],[{"start":185.2,"text":"Advance Auto Parts’ chief executive Shane O’Kelly said sales were likely to slow ahead of the peak summer driving season as the company “transition[s] beyond the recent tax refund tailwinds”. "}],[{"start":null,"text":""}],[{"start":196.6,"text":"Pressure on consumers has been mounting since the outbreak of the Middle East conflict on February 28. Iran’s success in choking off oil shipments through the Strait of Hormuz, through which a fifth of all crude flowed, has pushed up petrol and diesel prices by half. "}],[{"start":212.7,"text":"The PNC data showed that in recent weeks the amount of card spending on petrol had risen by almost 40 per cent compared with the same period last year, with US consumers struggling to cut back on purchases of such an essential commodity."}],[{"start":226.54999999999998,"text":"“Gas prices remain elevated and that pressure is real for families,” said Bob Eddy, chief executive of warehouse retailer BJ’s Wholesale Club. “To put this in further context, in April alone, our members spent $143mn more at our pumps than they did a year ago.”"}],[{"start":244.6,"text":"The war has also meant that inflation is now outpacing wage growth, meaning workers are getting paid less in real terms. “By our reckoning, wage growth has steadily lost ground relative to the pace of inflation since the middle of last year,” said Nathan Sheets, global chief economist at Citigroup. "}],[{"start":261.8,"text":"“First President Trump’s tariffs and, more recently, Iran-related pressures on oil and commodity prices have pushed up prices relative to wages.”"}],[{"start":270.8,"text":"Michael Pearce, chief US economist at Oxford Economics, said a slowdown in spending driven by the Iran war would constitute “a speed bump” for US growth. “It’s going to take the shine off what would otherwise have been a very good year for the US economy.”"}],[{"start":286.3,"text":"Some poorer households, many of whom benefited less from Trump’s tax cuts, may already be feeling the pinch. "}],[{"start":292.75,"text":"Retail sales grew 4.9 per cent in April, versus the previous year. But much of this was driven by wealthier Americans, who were the biggest winners from Trump’s budget bill and who spend a smaller share of their income on fuel costs. "}],[{"start":306.95,"text":"Bank of America estimates the top third of earners received a roughly 13 per cent increase in tax rebates, while the rise for the bottom third was about 6 per cent. "}],[{"start":318.55,"text":"“You’re getting a disproportionate benefit from these refunds flowing to the households that are least impacted by the inflationary pressures,” said Mike Reid, chief economist at RBC. "}],[{"start":328.7,"text":"“The folks who are feeling the pinch right now and perhaps seeing a little bit more of that stress . . . It’s really the middle-income folks,” he said."}],[{"start":null,"text":""}],[{"start":336.7,"text":"Consumers have also grown increasingly pessimistic about the state of the economy as the war has dragged on. "}],[{"start":343.5,"text":"The closely watched University of Michigan Index of Consumer Sentiment has hit record lows, while the Conference Board’s consumer confidence index has also slumped. The Michigan survey said 57 per cent of consumers believed high prices were eroding their personal finances, up from 50 per cent last month."}],[{"start":362.05,"text":"“The sentiment has been pretty negative across almost every age group, almost every demographic,” said Tarang Amin, chief executive of Elf Beauty, which sells brands such as Rhode and Naturium. "}],[{"start":373.95,"text":"“I would say it’s across the board in terms of fears,” Amin said. “You see consumer sentiment [is] low. We see fears on inflation, the costs consumers are bearing.”"}],[{"start":384.8,"text":"Signs of distress among regular Americans have also ticked up, with delinquencies on credit cards, auto loans and student loans all rising, according to figures from the Federal Reserve Bank of New York. "}],[{"start":397,"text":"John David Rainey, Walmart’s chief financial officer, acknowledged that while wealthier customers were “spending with confidence,” the low-income customer was “more budget conscious and perhaps navigating financial distress”."}],[{"start":418.25,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779693853_5508.mp3"}