Trump auto tariffs threaten new supply-price shock
1. Supply chain shock increased car ownership costs in the U.S. 2. Rising costs affect loan rates and insurance, impacting consumer spending.
FAQ
Why Bearish?
Increased car ownership costs can reduce disposable income, leading to decreased consumer spending on discretionary items. Historical trends show that when consumer costs rise significantly, sectors contributing to GDP performance, including those represented in the S&P 500, often see a downturn.
How important is it?
Higher car ownership costs can limit consumer discretionary spending, affecting growth in sectors linked to S&P 500 companies. The reliance on consumer spending as a growth driver makes this significant.
Why Short Term?
The effects of rising vehicle costs are likely to materialize quickly in consumer behavior. Previous instances following economic downturns saw immediate shifts in discretionary spending, affecting stock indices shortly thereafter.