Retail sales in the United States fell unexpectedly by 0.6% in July, marking the largest monthly decline since May 2025, according to the Commerce Department. This drop surprised economists, who had predicted a slight increase of 0.1%. The decline was the first in nine months and was exacerbated by a 0.2% drop when excluding more volatile core sales.
The decrease in retail sales comes after Americans increased spending in April and May, fueled by tax refunds and events like the World Cup and Amazon Prime Day. However, the recent decline suggests consumers are becoming more cautious as summer discounts, including tax-free back-to-school sales, come to an end.
The report also highlighted a 0.9% drop in sales at gas stations, influenced by rising fuel prices due to tensions in the Strait of Hormuz. Gas prices increased to $4.08 per gallon, up from $3.85 a month ago. Additionally, online sales fell by 2.2% from June, impacting the control group used to calculate economic growth, which fell by 0.4%.
Despite the decline, some areas showed growth, with clothing and accessories stores, furniture and home furnishing stores, and building material and garden supplies merchants posting gains. Restaurants also registered a healthy 0.5% increase in sales.
Economists are closely monitoring consumer behavior as inflation remains a concern. While most economists still expect solid growth in the July-September quarter, many have lowered their forecasts following the retail sales report.
For more detailed information, visit the full report on Tribune Ledger News and TD Economics.
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