U.S. retail sales post sharpest drop since May 2025 as confidence and labor data weaken

News Editor

2026-08-15 05:07:42

U.S. consumer spending showed clearer signs of slowing in July, with Commerce Department data showing retail sales fell 0.6% from a month earlier, the steepest monthly decline since May 2025 and well below expectations for a modest gain. Sales excluding gasoline also fell 0.6%, suggesting the weakness was not limited to energy-related price effects. Core retail sales, a measure often used to track underlying consumer demand, dropped 0.4%. Online sales fell 2.2%, and auto and parts dealers also posted declines, while sales at restaurants and bars rose 0.5%. Because retail sales are reported in nominal terms, the inflation-adjusted picture may be softer. With U.S. CPI rising another 0.1% in July, real goods purchases may have fallen by close to 0.7%. Market participants, as cited by BlockBeats, said the Iran war and the related energy supply shock are adding pressure to the U.S. economy. The Federal Reserve had earlier said conflict in the Middle East lifted energy prices and inflation, while household spending growth remained only "very moderate." Separate data from the University of Michigan showed preliminary August consumer sentiment fell to 51 from 55.2 in July, while July employment data also pointed to softer conditions.

U.S. consumer spending showed notable signs of slowing, according to data released on Aug. 15 and cited by BlockBeats. The U.S. Commerce Department said retail sales fell 0.6% month over month in July, the largest monthly decline since May 2025 and far weaker than earlier market expectations for a slight increase.

Details in the report pointed to broader weakness. Retail sales excluding gasoline also fell 0.6%, indicating that softer spending was not driven only by energy prices. Core retail sales, a gauge used to track underlying consumption trends, declined 0.4% in July and came in below market expectations. Online sales dropped 2.2%, and sales at motor vehicle and parts dealers also moved lower. Sales at restaurants and bars, however, rose 0.5%.

The retail sales figures are nominal and do not adjust for inflation. With the U.S. consumer price index rising another 0.1% in July, the decline in real goods purchases may have been close to 0.7%.

BlockBeats said the market sees the Iran war and the resulting shock to energy supply as a growing source of pressure on the U.S. economy. The Federal Reserve had previously said conflict in the Middle East pushed up energy prices and lifted inflation, while growth in household spending was only "very moderate."

Consumer sentiment data also weakened. University of Michigan data showed preliminary U.S. consumer sentiment for August fell to 51, down from 55.2 in July, ending a two-month improvement streak. The decline was more pronounced among older Americans, lower-income groups, and people without a college degree.

The labor market sent weaker signals as well. The U.S. lost 23,000 jobs in July, while the labor force participation rate fell to 61.4%. The unemployment rate held at 4.1%, mainly because some people left the labor force, and wage growth slowed to 3.2%.

Analysts said the energy price shock may be masking a broader deterioration in U.S. economic fundamentals. Inflation is rising because of supply-side pressure, while consumers are cutting spending as purchasing power weakens, and companies face the risk of softer demand. With consumer spending accounting for about two-thirds of economic activity, the cooling in that segment may make the Federal Reserve's next policy decisions harder.

This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan.

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