US retail sales fell 0.6% in July, missing forecasts, signaling weakening consumer spending ahead of potential market volatility.
Macro & Markets ·
Consumer spending in the United States contracted in July, with retail sales declining 0.6% for the month—the steepest drop since May 2025—and falling short of the consensus forecast for a 0.1% increase. Online retailers bore the brunt of the pullback, with non-store sales sliding 2.2%, marking the second-worst performance since July 2021. Vehicle and parts sales also weakened, falling 1.8% month-on-month.
Measures that strip out volatile categories revealed further softness in household demand. Retail excluding automobiles slipped 0.3%, undershooting economist expectations of 0.2% growth, while the control group—which excludes food services, auto dealers, building materials retailers, and gas stations and feeds into GDP estimates—plummeted 0.4%, the largest monthly contraction since January 2025.
The data points to a shift in consumer behavior toward greater caution. Whether this reflects temporary adjustment, tightening financial conditions, or a sustained pullback in discretionary purchases remains unclear, as does the implications for broader economic growth and inflation trajectories in coming months.