U.S. Economy Finds Its Footing as Tariff Fears Ease

After months of uncertainty triggered by President Trump’s sweeping tariffs earlier this year, new signs suggest the U.S. economy may be stabilizing. Initial fears of recession, inflation, and plummeting consumer confidence are gradually giving way to a more optimistic outlook. The S&P 500, which had fallen nearly 20% between February and April, is now rebounding to record highs, while consumer sentiment, once at a three-year low, is climbing again.

According to The Wall Street Journal, retail sales have outpaced economists’ forecasts, and while economic growth remains modest, fears of a sharp downturn have not materialized. Barclays economist Jonathan Millar, who once projected a recession for 2025, now expects continued albeit slow growth. “We’ve been surprised again and again by consumers,” Millar noted. That resilience has translated into higher spending and renewed confidence across businesses and households alike.

Among those adapting is Tyler Ahn, a Portland-based product manager who initially cut back spending in response to Trump’s tariff threats. After months of caution and stocking up on essentials, Ahn recently resumed normal spending and returned from a lavish two-week trip to Europe.

“I’ve gotta live,” she said, reflecting a sentiment now echoed by many Americans.

Businesses are adjusting as well. Command Education, a New York-based college admissions consultancy, reported its busiest period all year in early July as wealthy clients returned. Financial institutions like JPMorgan Chase and Goldman Sachs have reported strong earnings, and travel companies such as United Airlines are seeing rising demand. A recent small-business survey by Constant Contact showed nearly half of respondents experiencing stronger-than-expected demand, with many planning to hire in the months ahead.

Still, challenges remain. Inflation, though cooling, is above the Federal Reserve’s target, and tariff-sensitive goods are beginning to see price hikes. Some sectors, including manufacturing and hiring, continue to show weakness. Yet business owners like Christian Reed and Aaron Anderson, once cautious due to tariff uncertainty, are now pressing forward with expansion and investment. As Anderson put it: “I’m still optimistic long-term.” For now, cautious optimism seems to be replacing the fear that once gripped the economy.