The U.S. Department of Commerce released data on Thursday, July 17th, showing that retail sales in the United States increased by 0.6% in June compared to a 0.9% decline in May, indicating a significant rebound exceeding expectations.
According to the Commerce Department’s data, unadjusted retail sales rebounded by 0.6% in June after experiencing declines in April and May. This figure surpassed almost all predictions in a survey of economists by Bloomberg, indicating that consumer spending was stronger than expected. Excluding motor vehicles and parts, sales increased by 0.5%.
Out of 13 categories, 10 showed growth in June. For example, sales of clothing and accessories rose by 0.9%; health and personal care sales increased by 0.5%; restaurant sales grew by 0.6%; online retailers saw a 0.4% increase in sales; and sales at automobile and parts dealers surged by 1.2%.
However, sales in sectors such as electronics and appliances retailers, as well as department stores, experienced declines.
Despite concerns over tariffs and inflation putting pressure on consumers’ economic and financial outlooks, the retail report for June brought some relief.
“Do not underestimate American consumers,” said Heather Long, Chief Economist at Navy Federal Credit Union, in a statement. “Consumers are still worried about tariffs and possible price increases, but if they feel they can get a good deal, they are willing to make purchases.”
“This summer, the key word for the economy is ‘resilience’,” she added.
Long also noted that the unemployment rate remains low and consumers still have enough confidence in the steady development of the economy.
As the retail sales report was released, the fluctuating waves of Trump’s tariffs have affected businesses and households. For businesses, this has made managing supplies and inventories more challenging. The uncertainty of tariffs has also made American shoppers more focused on essential items while shopping.
Last week, Amazon launched a four-day Prime promotion, while competitors like Walmart and Target also introduced their own promotions. According to the Adobe Digital Insights report tracking online sales, the promotions drove $24.1 billion in online consumption, a 30.3% increase from the same period last year.
However, an analysis of Amazon Prime orders by consumer data provider Numerator showed that buyers still prioritize household essentials like detergent and paper products over larger items.
The inflation data released this week showed that consumer prices in June rose by 2.7% compared to the same period last year, higher than the 2.4% annual increase in May. Prices of tariff-sensitive goods such as furniture, household appliances, sporting goods, and toys noticeably increased in June.
President Trump has been pressuring Federal Reserve Chairman Powell to cut rates quickly. However, the new inflation data makes it more likely that the Federal Reserve will maintain the current interest rates. Americans continue to consume, which is what the Federal Reserve aims to curb by keeping rates high.
(This article is based on reports from the Associated Press and Bloomberg News.)