Topline
American consumers defied expectations in June – typically a slow month in retail – posting a 0.6% seasonally-adjusted uptick in May-to-June spending and a 3.7% unadjusted increase year-over-year, as shoppers appear to be adopting a ‘wait-and-see’ attitude toward economic uncertainty and looming tariffs.
Consumers continue to spend in the face of uncertainty and shrugging off tariff concerns,’ said … More
Key Facts
Underscoring June’s uptick wasn’t just a blip, the U.S. Census Bureau reported seasonally-adjusted retail sales from April through June advanced 4.1% year-over-year, signaling unexpected strength in consumer demand.
Retail sales totaled $4.2 trillion through the first half of 2025, up 3.6%, demonstrating consumer resilience despite all the uncertainties and wavering consumer confidence.
The automotive sector, which is retail’s largest, grew 5.1% over the last six months, and non-store retail, the second largest category, posted 6.4% growth.
The third largest and highly discretionary food services sector advanced 5.1%, followed in order of magnitude by food and beverage stores up 2.6% and general merchandise stores up 2.4%.
Gasoline station sales dropped 4% reflecting a decline in prices – good news for consumers.
Will the other shoe drop in consumer spending? What about if/when Trump’s tariffs kick in?
Key Background
Retailers have been on pins and needles this year with tariffs expected to have a strong inflationary impact once they take hold. Early in the year, retailers stocked up on inventory to get ahead of tariffs and there are indications consumers pulled forward some big ticket and planned purchases as well. On a positive note, National Retail Federation chief economist Jack Kleinhenz said “economic fundamentals appear solid,” despite pervasive uncertainty surrounding tariffs, immigration, deregulation and other government policies. And while he anticipates tariffs to potentially increase prices and cause a “downshift” in consumer spending, he also sees a bright side in the passage of the One Big Beautiful Bill, which provides business incentives, permanent tax cuts for individuals and measures to encourage workforce participation. Kleinhenz said the bill’s passage “meaningfully reduces fiscal policy uncertainty.”
Crucial Quote
“Consumers continue to spend in the face of uncertainty and shrugging off tariff concerns, with U.S. retail sales showing relative stability compared to last month and outpacing inflation compared to a year ago,” said Katie Thomas, Kearney Consumer Institute.
Tangent
Consumers got a jump on back-to-school spending this year, with 67% of shoppers having begun in early July, compared to 55% who made an early start last year, according to a survey of 7,600 adults conducted by Prosper Insights for the National Retail Federation between July 1-7. The NRF said shoppers were motivated to shop early specifically out of concern that prices will rise due to tariffs. Even as consumers are carefully budgeting for back-to-school, NRF projects total back-to-school spending will increase about 1.5% to $39.4 billion, up from $38.8 billion last year. Back-to-college will grow even more, up 2.5% from $86.6 billion in 2024 to $88.8 billion.
What We Don’t Know
Observing that halfway through the year, retail has remained steady, Global Data’s Neil Saunders suggests, “There is every likelihood that retail performance will moderate with tariff deadlines now looming, inflation coming in hotter and a range of economic pressures stacked up.” Or will consumer resilience defy expectations and keep retail cash registers humming?
Further Reading
Retail Sales Jumped More Than Expected Last Month (CNN, 7/17/2025)
U.S. Retail Sales Growth, Steady Job Market Bolster Fed’s Rate-Cut Delay (Reuters, 7/17/2025)
Advance Monthly Sales for Retail and Food Services (U.S. Census Bureau, 7/17/2025)
Monthly Economic Review: July 2025 (National Retail Federation, 7/8/2025)