US retail sales drop 0.6% in July, biggest monthly decline since May 2025

American consumers hit the brakes in July. Retail and food services sales fell 0.6% month-over-month to $763.6 billion, according to Commerce Department data released Friday. That’s the steepest monthly decline since May 2025, and it caught Wall Street off guard: economists had expected a modest 0.1% increase. June’s numbers were revised to show just a 0.2% gain. Where the weakness showed up The damage was spread across several major categories. Nonstore retailers, which includes e-commerce, led the retreat with a 2.2% drop. Motor vehicle and parts dealers fell 1.8%. Gasoline stations declined 0.9%, reflecting both lower volumes and shifting fuel prices. Electronics and appliance stores slipped 0.5%. Clothing stores posted a 1.9% gain. The control group, a measure that strips out autos, building materials, and gas to get closer to what actually feeds into GDP calculations, dropped 0.4%. That’s the most significant decline in that metric since early 2025. The tax refund sugar rush is over Earlier in 2026, consumers were flush with cash from larger-than-usual tax refunds tied to the 2026 tax cuts. That extra money juiced spending through the first quarter and into early summer. With ...