U.S. retail sales dropped 0.6% in July from June, according to the Department of Commerce. This marks the largest decline since May 2025 and the biggest drop in more than a year, following an unrevised 0.2% gain in June.
The decline was driven by consumers pulling back on purchases at auto dealers and online stores. This shift follows a notable bump in spending during April and May, as Americans utilized their tax refunds, an effect that may have faded last month.
The unexpected drop has raised concerns among economists about the resiliency of consumers who have powered the economy despite nagging inflation and soaring gasoline prices. The data suggests American households are facing economic strains brought on by persistent inflation, raising doubts about their ability to keep spending amid the rising costs of daily expenses.