Frustrated US consumers cut their retail spending last month | CNN Business

Washington —

The US economy is showing some cracks beneath the surface as consumers remain frustrated about the higher cost of living.

Retail sales fell 0.6% in July from the prior month, the Commerce Department said Friday, down from June’s 0.2% and marking the steepest drop since May 2025. Those figures are adjusted for seasonal swings but not inflation. A separate report from the University of Michigan showed that consumer sentiment declined about 8% early this month to a preliminary reading of 51, ending a two-month streak of rising sentiment.

Both reports came in worse than economists had estimated in polls by data firm FactSet, showing that the lifeblood of the US economy — consumer spending — is coming under pressure. People’s dollars account for about two-thirds of economic growth.

“American consumers are showing signs of fatigue,” Heather Long, chief economist at Navy Federal Credit Union, said in commentary issued Friday.