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With fears of tariff-driven price hikes looming, Americans headed to the shopping aisles in much bigger numbers last month, pushing up durable goods orders and surpassing forecasts.
Data released Thursday by the U.S. Census Bureau showed that orders for manufactured durable goods in March increased $26.6 billion, or 9.2%, to $315.7 billion. This followed a 0.9% February increase and was far ahead of the 1.2% increase forecasted by Dow Jones (NWSA+0.71%).
The “durable goods” umbrella includes aircrafts, automobiles, and items such as appliances, computers, and jewelry.
A big reason for the increase? People hoping to avoid price hikes were buying big-ticket items ahead of President Donald Trump’s “Liberation Day” tariff announcement. Transportation equipment orders barreled upward in March at 27%, led by a 139% increase in nondefense aircraft and parts.
In a report released Wednesday by the Federal Reserve, analysts noted that economic activity was little changed since the central bank’s previous report but said that uncertainty around international trade policy was pervasive across its reports.
Most areas of the country saw “robust sales of vehicles,” which the report said can generally be “generally attributed to a rush to purchase ahead of tariff-related price increases.”
Even though shoppers rushed out in March to beat higher prices, the Fed report noted that it might have been a tad too late because some goods had already started to climb in price ahead of the president’s tariff announcement.
“Many firms have already received notices from suppliers that costs would be increasing. Firms reported adding tariff surcharges,” the report said. It added that businesses are shortening pricing horizons to account for uncertain trade policy.
“Most businesses expect to pass through additional costs to customers,” the report noted. “However, there were reports about margin compression amid increased costs.”