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U.S. retailers are facing some headwinds when it comes to driving sales. According to the latest data from the U.S. Census Bureau, advance estimates show retail and food service sales reached $715.4 billion in May, down 0.9% (plus or minus 0.5%) from April. The dip comes despite consumer sentiment ostensibly improving in June.
And in April, that figure was pegged at a decline of 0.1% versus March's sales.
There is a silver lining to be observed, however: When comparing year-over-year numbers from March through May of 2025 versus the same time frame in 2024, an improvement of 4.5% (plus or minus 0.4%) was noted.
Reuters quoted Michael Pearce, deputy chief economist at Oxford Economics, as pointing to tariff pressures that may exert greater pressure in the months to come.
"Tariff announcements have had a clear impact on the timing of large-ticket purchases, notably autos, but there are few signs yet that tariffs are leading to a general pullback in consumer spending," Pearce said.
"We expect a more marked slowdown to take hold in the second half of the year, as tariffs begin to weigh on real disposable incomes," he added.
Retail Sales Could Remain Sluggish This Summer, but It's Not a Certainty
A variety of factors were cited as creating macroeconomic tension affecting retail sales, from unseasonably cool weather to fluctuating oil (and thus, gasoline) prices. A slowdown in terms of the automotive retail sector was also underscored, with high prices and tariffs dovetailing to put a damper on consumer appetites for a new set of wheels.
As Reuters indicated in its breakdown of the data, sales fell across several key categories in May: auto and parts dealers dropped 3.5%, building materials and garden equipment declined 2.7%, service station receipts were down 2%, and electronics and appliance stores saw a 0.6% dip.
On the other hand, clothing retailers saw increased sales of 0.8%, furniture stores gained 1.2% in receipts, sporting goods, hobby, musical instrument, and book stores — as a cohort — observed an uptick in sales of 1.3%. Online sales as a whole grew by 0.9%.
A Weak US Dollar Could Hamper Consumer Spending This Year
A weak dollar isn't helping, with the U.S. dollar having declined in value by about 6.2% on a trade-weighted basis. Reuters suggested that President Donald Trump's on-again, off-again tariff policy and "aggressive" trade posture may have shaken investor confidence in the greenback. The outlet cited Ben Ayers, senior economist at Nationwide, on the subject.
"This is another sign that inflation will pick up this summer and into the fall as prices start to reflect the higher costs for goods from enacted tariffs," Ayers said.