Retail sales in the United States unexpectedly fell in July, providing a new indication that consumer spending may be losing some of its earlier momentum. According to the U.S. Commerce Department, retail and food services sales totalled $763.6 billion, a decline of 0.6% from the previous month.
The result was considerably weaker than economists had expected. Analysts surveyed by Reuters had forecast an average increase of 0.1%. Sales had risen by 0.2% in June. July’s decline was the first in nine months and the largest monthly fall in 14 months.
Despite the monthly decline, the figures do not indicate a broad collapse in U.S. consumption. Retail and food services sales remained 5.0% higher than in July 2025. Total sales between May and July 2026 were also 6.3% above the corresponding three-month period a year earlier.
One factor behind the July weakness was the timing of major online promotions. Amazon moved its Prime Day event from July to June, while other large retailers held competing promotions during the same period. This brought some purchases forward and contributed to a 2.2% decline in sales at nonstore retailers in July.
The automotive sector also weighed on the overall figure. Sales at motor vehicle and parts dealers fell 1.8%, while electronics and appliance stores recorded a decline of 0.5%. Lower receipts were also reported at gasoline stations, partly reflecting changes in fuel prices.
Not every category weakened. Clothing stores recorded higher sales, while spending at restaurants and bars increased. The mixed picture suggests that American consumers have not stopped spending altogether but are changing how and where they allocate their money.
A particularly important indicator was the so-called core retail sales measure used more directly in calculations of consumer spending within gross domestic product. This measure, which excludes automobiles, gasoline, building materials and food services, declined by 0.4% in July. Economists had expected it to increase by 0.3%.
The weaker figures follow a period of stronger consumer activity earlier in 2026. Larger tax refunds supported household spending during the first part of the year, but that effect has gradually faded. Consumers are also facing continued pressure from prices that remain considerably higher than a year ago.
Consumer spending is particularly important to the U.S. economy because it accounts for roughly two-thirds of economic activity. A sustained slowdown in household purchases could therefore affect economic growth during the second half of the year.
Following the release of the data, some economists lowered their estimates for third-quarter economic growth. Goldman Sachs reduced its estimate for annualised growth to around 2.2%. One month of weaker retail sales, however, is not sufficient to conclude that the U.S. economy is entering a serious downturn.
There are also factors continuing to support household spending. Strong financial markets have increased the wealth of households holding shares and retirement investments. This effect is particularly significant among higher-income consumers and could offset some of the pressure affecting other households.
The July figures should therefore be viewed as a warning of cooling consumer demand rather than evidence of a sudden collapse. Sales were clearly weaker than in June but remained substantially above their level a year earlier. The coming months will show whether July was primarily affected by the earlier timing of major purchases and other temporary factors, or whether American households are beginning a more sustained reduction in spending.
