Not everyone's keen on passing the tariff buck to consumers right now: Stew Leonard's Wines and Spirits president
U.S. Consumers Generally in a Positive Position, but CEO Warns of Potential Concerns
Stew Leonard's Wines and Spirits President Blake Leonard weighs in on the influence of tariffs on the alcohol industry and consumers on 'Mornings with Maria.'
Capital One CEO Richard Fairbank recently shared his insights on how consumers are coping amid financial pressures during the bank's quarterly earnings call.
He was questioned by an analyst about the financial institution's viewpoint on American consumers, given worries in the market regarding the Trump administration's tariffs.
Fairbank affirmed, "The U.S. consumer remains a pillar of strength in the economy." This resilience, he asserted, is true across key indicators.
"Consumer debt obligations remain steady close to pre-pandemic levels," Fairbank declared. "In our card portfolio, we're witnessing improved delinquency rates, declining late payments and better payment performances on a year-over-year basis."
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Fairbank acknowledged that "certain sections of consumers" are experiencing tension from cumulative inflation and skyrocketing interest rates. Overall, however, he expressed confidence in the U.S. consumer's solidity.
The Capital One CEO did acknowledge the share of customers paying only the minimum amount due on their credit cards has gone "slightly beyond pre-pandemic proportions," pointing to the impact of inflation and interest rates on some consumers.
Regarding revolving credit habits, Fairbank stated they have "stabilized over the past year" but are "below pre-pandemic levels for our primary products and markets," a favorable sign according to him.
He further discussed patterns observed in consumer spending during the first quarter.
"Spending habits remained relatively stable up to the end of Q1," Fairbank informed analysts and investors. "In recent weeks, we've noticed an upward trend in spend growth per customer compared to the same period last year across all customer segments."
Fairbank also discussed trends in consumer spending during the first quarter. (Kena Betancur/VIEWpress / Getty Images)
He attributed part of this surge to Easter's late arrival this year.
"We've also noticed a recent uptick in retail spending, particularly electronics in the last few weeks," Fairbank reported.
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He speculated that some of this occurrence could stem from consumers making advance purchases in response to tariffs, but "we'll have to observe the situation over time."
Meanwhile, growth in "T&E" and airfare spending have taken a slight hit, according to Fairbank.
"While it's early days, when we look at sector data, there seems to be a slight pull-forward in automobile purchases as consumers try to avoid tariff-related consequences. And we continue to monitor our application and origination volumes," he also pointed out. "There are early, albeit unmistakable indications that auction prices are rising at rates beyond seasonal norms. All of this remains preliminary, yet that's what we observe at the present time."
President Trump introduced a 25% tariff on imported passenger vehicles and light trucks last month, as well as a similar 25% tariff on some auto part imports.
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Tariffs on imported vehicles and trucks became effective on April 3. Meanwhile, the auto parts tariff is set to be enforced in early May.
In early April, Trump initiated a 90-day freeze on reciprocal tariffs and opted to impose a 10% duty on countries that had not retaliated against U.S. for reciprocal tariffs during this period. During the same timeframe, he increased duties on Chinese products to 145%.
- Stew Leonard's Wines and Spirits President Blake Leonard discussed the impact of tariffs on consumers and the alcohol industry during 'Mornings with Maria.'
- Capital One CEO Richard Fairbank highlighted the resilience of American consumers, stating they are a "pillar of strength in the economy."
- Fairbank acknowledged concerns about the Trump administration's tariffs, but expressed confidence in consumers' ability to cope, citing steady consumer debt obligations and improving delinquency rates.
- Despite these positive indicators, Fairbank admitted that some sections of consumers are experiencing tension from inflation and rising interest rates.
- He noted a slight increase in the percentage of customers paying only the minimum amount due on their credit cards, attributing this to the impact of inflation and interest rates.
- Fairbank also observed a stabilization of revolving credit habits over the past year, but they are still below pre-pandemic levels in primary products and markets.
- President Trump implemented a 25% tariff on imported passenger vehicles and light trucks last month, as well as a 25% tariff on some auto part imports, which are set to be enforced in early May.
