Retail and food services sales fell 0.6% month-over-month in July to $763.6 billion, according to Commerce Department data. This marks the steepest monthly decline since May 2025, missing economist forecasts of a 0.1% increase by a wide margin. Several categories contributed to the weakness: e-commerce sales plunged 2.2%, motor vehicle and parts dealers fell 1.8%, and gasoline stations declined 0.9%. The control group, which strips out autos, building materials, and gas and feeds into GDP calculations, dropped 0.4%, its most significant decline since early 2025. Analysts attribute the slowdown to the fading effect of larger-than-usual tax refunds tied to the 2026 tax cuts, which had boosted spending through the first quarter and early summer.
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