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.
