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U.S. retail sales unexpectedly post largest drop in more than a year
PBS • • business
Key Points:
- U.S. retail sales unexpectedly dropped 0.6% in July, the largest decline since May 2025, contrary to economists' expectations of a slight increase, signaling potential consumer fatigue after recent spending surges.
- The decline was influenced by lower sales at gas stations and auto dealers, with gas prices rising sharply late in the month due to geopolitical tensions, reaching $4.08 per gallon, 92 cents higher than last year.
- Despite the overall drop, some sectors like clothing, furniture, and building materials saw sales gains, and restaurant spending increased, indicating uneven consumer behavior across categories.
- Consumer sentiment worsened amid persistent inflation and rising credit card debt, which has surged 60% over five years, raising concerns about the sustainability of consumer-driven economic growth.
- Economists remain cautious but not pessimistic, noting balanced job markets and wealthier households' continued spending, while closely monitoring upcoming holiday and back-to-school sales for further economic signals.
