US retail sales experienced a significant decline in July, with sales falling 0.6% from the previous month, according to the Commerce Department. This drop is the steepest since May 2025 and falls short of the 0.1% gain economists had projected.

Retail Sales Trends

Sales at gasoline stations decreased 0.9% in July, coinciding with the drop in energy prices during the same period. Even when excluding these sales, retail spending still saw a decline of 0.6%. A measure of retail spending that strips out volatile categories and serves as a proxy for underlying demand also declined 0.44% in July, contrary to the expected 0.4% gain.

Retail spending has been trending lower since the spring, largely due to the fading boost from larger tax returns and the impact of higher energy prices on consumers’ paychecks. Additionally, Americans’ attitudes toward the economy have been pessimistic due to wartime price spikes.

Historically, the US consumer has shown resilience through various economic challenges, including the Federal Reserve’s aggressive rate-hiking campaign to tame inflation from 2022 to 2023 and the uncertainty surrounding policy changes during President Donald Trump’s second term. However, if the labor market begins to falter, consumers may pull back, putting pressure on the core of the US economy: spending.

Original reporting: KRDO (Colorado Springs metro) — read the source article.