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June 17, 2025
Will Retail Sales Remain Sluggish This Summer?
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.
Discussion Questions
Will retail sales remain sluggish this summer, in your opinion? Why or why not? Which segments are poised to outperform, and which are more likely to see a continued decline?
What levers can retailers pull to keep consumers interested in opening their wallets throughout the next few months?
Are trade tensions likely to ease in the near future, and if so, is a rebound for the U.S. dollar in the cards?
Poll
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Dick Seesel
Principal, Retailing In Focus LLC
Carol Spieckerman
President, Spieckerman Retail
Cathy Hotka
Principal, Cathy Hotka & Associates
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Let’s be very clear. Retail sales DID NOT decline in May. Compared to May 2024, sales were up by 3.1%. Compared to April 2025, sales were up by 4.3%. This was not a terrible month, but then neither was it a month when tariffs fully hit. It also benefited from a modest amount of pull-forward spending. As we move into the second half of the year, a lot of the consumer fundamentals will tighten and growth could well become more elusive.
I think you lost me: do you mean compared to April 2024?
No, I mean April 2025 – because people often refer to a month-over-month number (they did it in the article). It’s a silly way of measuring in my view, but the numbers still show an increase!
So April ’25’s Y-on-Y? (722.0 vs. 687.6)
No: May 2025 (753.2) v April 2025 (722.1) = +4.3%
It is a weird way of looking at it, but many insist on looking at how sales compare to the previous month. I am just pointing out that even by this measure, sales still grew!
Then you appear to be drawing from a different data set: the table linked to the story has
AP’24 687,602
MY’24 692,635
AP’25 721,983
MY’25 715,417
These are seasonally adjusted numbers. I do not use seasonally adjusted numbers as they are a statistical manipulation of reality – and are basically nonsense. I use the unadjusted, actual numbers which are also available from the Census Bureau:
April 2024: 686,711
May 2024: 730,332
April 2025: 722,097
May 2025: 753,158
These are the numbers the Census Bureau should lead with. For some reason, they elect not to.
I’ll not comment on their preferences, tho I know season adj is quite important for employment figures…perhaps more so than with prices.
For retail sales, they are a nonsense. No retailer (indeed, no private company) reports their sales on a ‘seasonally adjusted’ basis. They report what they actually took. Only the government reports in this weird way!
Well, some are big on pro-forma results – EBAE (earnings before all expenses) – but I digress 🙂
Very silly. Anyone who has ever been responsible for a sales line in retail knows the month is a major factor in pacing. Could care less about the month earlier…its grasping.
Pharmacies and liquor stores should do well…no, seriously, I’m not sure there’s much value in making predictions like this: suffice it to say one can find evidence for any scenario; and while I feel the cause for negativty is stronger, I don’t see it as a foregone conclusion.
The May numbers weren’t terrible but as a wise economist recently said, a “slow slowing” of the economy is underway. For now, we’re not seeing the impact of policies, we’re seeing the effects of uncertainty but that can and will likely change in the fall. Given the lag time between tariff announcements, implementation, supply chain lead times, and actual pricing changes, reality will start to hit then. Amazon’s just-announced extended Prime Day(s) timeframe feels like a “get while the getting’s good” play and I expect other retailers will make similar preemptive moves. And this is just the tariff topic. Batten down the hatches.
Neil is correct: Year over year is what matters. Month to month can vary based on weather and Easter timing.
That being said, the overhang of tariffs and other uncertainty may cast a shadow over the next few months’ trend.
We’re in a holding pattern right now. If tariffs continue to be a threat instead of a reality, we’ll stumble along as we are now. If they arrive in full force, though, and lower-income Americans face rising medical prices due to slashing of Medicaid, things will be very different.
I think segments like e-commerce, outdoor recreation, and health and wellness will outperform overall retail sales.Online shopping offers convenience and a wide selection, so e-commerce keeps growing.Fitness equipment and outdoor gear will also be in demand as people prioritize health and active lifestyles.
Here is what I’m thinking.
1. Retailers will need to be able to change how they do business quickly, show clear value, and stay flexible in order to be successful this summer.
2. Retailers should focus on the following to keep people shopping this summer:
Smart promotions are personalized, time-limited, and value-driven deals.
Relevant assortments include seasonal, budget-friendly, and one-of-a-kind items.
Convenient experiences: shopping online and in-store without any problems
Emotional connection through real stories and getting involved in the community
Loyalty programs—rewards, benefits, and early access to keep customers coming back
Influencer marketing: using local voices and niche communities to reach more people
Events in the store, like demos, pop-ups, and hands-on activities
The most important thing is to give value, relevance, and ease at every point of contact.
3. Trade tensions may ease a little in the near future as talks between the U.S. and important partners (like China and the EU) continue.