Pampers and Tide maker Procter & Gamble (P&G) plans to raise prices on some products in the next fiscal year to offset tariff-related effects.
The consumer goods giant released a mixed third-quarter earnings report on April 24. Revenue fell 2 percent to $19.78 billion, coming in below analysts’ estimates of $20.11 billion. The Cincinnati-based company reported earnings per share of $1.54, slightly above the $1.53 forecast.
Shares slumped as the Charmin and Crest owner offered a bleaker outlook for the current quarter and warned of higher prices. The company also projects lower profit growth of 2 to 4 percent, down from the previous forecast of 4 to 6 percent.
Executives said tariffs will raise some of their costs, and consumers will likely pull back their spending in response to economic uncertainty.
Consumers are adapting to today’s volatile economic climate, Schulten noted.
“Market volatility that impacts their portfolios, their 401(k)s, volatility on the economic outlook, uncertainty in the job market, volatility in terms of mortgage rate expectations, all the divisiveness and nationalistic rhetoric that we saw around the world, uncertainty on tariffs and the impact on prices and the availability of goods,” he said. "That’s a lot to process. So, what we’re seeing is, I think, a logical response from the consumer to pause.”
Retailers, Shoppers Brace for Higher Prices
Executives at Corporate America are telling shoppers that they will likely see higher prices in their stores.“We’re going to try to make sure we can do everything we can to protect pricing. But if there’s a 25 percent tariff, those prices will go up,” he said.
In a March earnings call, Best Buy CFO Matt Biluans told analysts and shareholders that the unknown is how consumers will respond to the possibility of rising prices.
“The giant wildcard obviously is how the consumers are going to react to the price increases in light of a lot of price increases potentially throughout the year and a general consumer confidence that is showing little signs of weakness at the moment,” he said.
Seventy-six percent of respondents said the administration’s tariff plans will raise consumer goods prices by either “a lot” or “somewhat.”
Whether this will lead to a decline in spending remains to be seen. Early indicators, such as The Conference Board’s March Consumer Confidence Index, suggest that U.S. households are shifting their priorities, as they plan to spend less on movies, live entertainment, and sports.
“Meanwhile, consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”
But while large companies and consumers have expressed consternation, small businesses are optimistic about the current economic landscape.
While more than one-quarter (29 percent) have already experienced higher costs amid tariff discussions, 61 percent have reported no price changes.
“Frankly, I’m a little stunned by their grit and determination,” said Andrew Crapuchettes, CEO of RedBalloon, in a statement. “Main Street is tuning out the tariff naysayers and doubling down on long-term prosperity.”
