Retail Sales Slump More Than Expected As Tariff Fears Hit Spending

U.S. consumers showed signs of strain in May, as a key spending gauge contracted for the second time this year, fueling concerns of a demand slowdown amid tariff-related trade uncertainty.

Headline retail sales slumped 0.9% month-over-month in May 2025, a sharp drop from April's downwardly revised 0.1% decline, the U.S. Census Bureau reported Tuesday. The print came in worse than economists' already grim forecasts for a 0.7% decline.

On a year-over-year basis, retail sales rose 3.3%, decelerating from April's 5% annual growth.

Among the few bright spots in the report:

• Miscellaneous store retailers: +2.9% month-over-month
• Sporting goods, hobby, musical instruments, and bookstores: +1.3%
• Furniture and home furnishings stores: +1.2%

The major drop occurred in motor vehicle and part dealers, down 3.5% on the month. Building material was another weak spending category, down 2.7%.

Excluding autos, retail sales dropped 0.3%, deeper than April's 0.1% decline.

Meanwhile, the control group?which strips out food services, autos, gas, and building materials?rose 0.4% in May. This component feeds directly into the GDP calculation via the personal consumption expenditures (PCE) metric.

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