US consumers cut retail spending sharply in July, with a 0.6% decline from the prior month, according to the Commerce Department. This drop is the steepest since May 2025 and is attributed to a decrease in sales at gasoline stations and a decline in online sales.

Retail Sales Decline

Retail spending has trended lower since the spring, as the boost from bigger tax returns faded and higher energy prices took a bite out of people’s paychecks. The decline in retail spending is a concern, as consumer spending accounts for about two-thirds of economic growth.

Online sales were down 2.2% in July, the biggest decline of all categories, followed by a 2% decrease at car dealerships. Meanwhile, spending at restaurants and bars climbed 0.5% last month.

The US economy is showing some cracks beneath the surface, with the decline in retail spending being a significant indicator. The drop in sales at gasoline stations, which fell 0.9% in July, coincided with the drop in energy prices that month.

Original reporting: KTVZ (Central Oregon) — read the source article.