Shoppers took a photo of their shoes at a foot locker store in New York City, USA on May 16, 2025.
Gina Moon | Reuters
Consumer spending was overwhelmed by a sharp pull back in May and reduced gas sales and uncertainty beyond the economy, the Commerce Department reported Tuesday.
Retail sales fell 0.9%, above the 0.6% expected from the Dow Jones consensus, according to figures adjusted to seasonality rather than inflation. The decline came at a period of uncertainty over tariffs and geopolitical tensions following the 0.1% loss in April. Sales have risen 3.3% from a year ago.
Excluding cars, sales fell 0.3%, worsening from the 0.1% profit estimate.
However, sales increased 0.4%, excluding a range of items such as car dealers, building materials suppliers and gas stations. Reading, known as the control group, is what the department uses when calculating gross domestic product.
Expenditure peaked in March as consumers preceded President Donald Trump’s “liberation day” tariff announcement in April, but sales generally slowed the year.
In building materials and garden stores, sales fell 2.7%, while slide energy prices fell 2% on gas station receipts. Auto and parts retailers fell 3.5%, while bars and restaurants saw sales fell 0.9%.
On the positive side, other retailers increased by 2.9%, while online sales increased by 0.9%, while furniture stores increased by 1.2%.
Stock market futures remained negative after release, and Treasury yields also fell.
“Americans bought their cars in March prior to tariffs and left the car dealership in May. The family says they are more expensive and more selective in places where they spend their money. “People are hunting for deals and don’t want to buy unless they see something good.”
Retail sales pullbacks occurred despite research showing that consumer sentiment actually improved in May compared to levels that had declined throughout the year. The ongoing trade war ignited by President Trump’s tariffs has dipped consumer and business optimism, but it was eased with some of the rhetoric during the 90-day negotiation period, resulting in a better reading.
GDP fell by 0.2% in the first quarter at its annual pace, but is expected to rebound. The second quarter’s growth towards retail sales releases was slated to 3.8%, according to rolling data from the Atlanta Federal Reserve GDPNOW Tracker. The gauge will be updated on Tuesday.
In other economic news on Tuesday, import prices remained flat against forecasts of 0.1% decline, according to the Bureau of Labor Statistics. Export prices fell 0.9%.
Adjusted: Retail sales fell 0.1% in April. Previous versions were incorrectly illustrated.
