Survey reveals expectations that higher import taxes imposed by President Donald Trump will feed through more broadly into consumer prices before gradually dissipating next year.

The Christmas-decorations industry is hoping tariffs don’t ruin the holidays.

“Inflation was broadly in line with expectations, as tariffs continue to be largely absorbed within profit margins. This gives the Fed the room to respond to the weaker jobs backdrop and cut interest rates from September.”

Exports fell in June, but imports contracted even more.

The value of core capital goods orders—a proxy for investment in equipment excluding aircraft and military hardware—dropped 0.7% last month, and bookings for all durable goods fell 9.3 percent.

U.S. factory activity contracted for a third straight month in May, and growth in overall U.S. private construction spending on manufacturing has flatlined from the boom seen under the Biden administration.

“With the economy set to cool sharply in the coming months as tariffs take their toll, price-sensitive consumers are poised to become more judicious with their spending.”

U.S. consumers are the most pessimistic they’ve been since early 2021, even as “hard data” still indicates a solid economy.