‘It’s not lights out for the economy’: U.S. retail sales drop 0.6% in July

Americans unexpectedly cut their spending in July as a boost from government tax refunds faded.

Retail sales slipped 0.6% last month, the biggest drop since May 2025, from a revised gain of 0.2% in June, according to Commerce Department data released Friday.

There was a notable bump in spending in both April and May as Americans dipped into their tax refunds.

That affect may have faded last month.

Excluding sales at gas stations and at auto dealers, retail sales in July fell 0.2%.

Gas prices bounced back in recent weeks in what appears to be a stalemate in the Strait of Hormuz .

Gas prices ticked higher overnight to $4.08 per gallon, up from $3.85 a month ago, according to motor club AAA.

It is 92 cents more per gallon than Americans were paying last year at this time.

July’s retail sales were dragged down by business at motor vehicle and parts dealers, which saw a 1.8% drop from a 1.9% increase in June.

June’s sales were helped by auto makers’ promotion incentives.

Electronics and appliance sales declined 0.5%.

Online sales fell 2.2% from June when they were fueled by Amazon’s four-day Prime Day event that began in late June, earlier than previous years.

“It’s not lights out for the economy, but new risks are emerging if the consumer pulls their support for economic growth” said Christopher S.

Rupkey, at the financial research firm fwdbonds.