Heather Long reports that American consumers are showing signs of fatigue as retail sales fall in July.
Heather Long, chief economist at Navy Federal Credit Union, noted that American consumers are showing signs of fatigue as retail sales fell 0.6% in July. The Commerce Department reported that this decline was the steepest drop since May 2025, falling short of the 0.1% gain economists projected. While retail spending remained up 5% from a year earlier, the pullback in spending is attributed to the Federal Reserve's aggressive rate-hiking campaign and the uncertainty surrounding the sweeping policy changes during the second term of President Trump. Consumer sentiment is also declining, with only 8% of consumers believing their incomes will will grow faster than inflation this year. This trend is reflected in the broader economic landscape, a report from the University of Michigan's surveys of consumers indicates. The Federal Reserve is currently balancing the other task of addressing inflation, which has become a growing problem due to the war with Iran, and ensuring the labor market remains intact. If the labor market continues to weaken, the Federal Reserve may avoid raising interest rates further.
Sources
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My Thoughts about those July Retail Sales
Wolf Street
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July Retail Sales Notch Biggest Drop in Over a Year
The New York Times
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Frustrated US consumers cut their retail spending last month
CNN
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Retail sales fall 0.6% as consumers see inflation eroding buying power
CFO Dive
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Retail sales slump in July
Axios