US retail sales unexpectedly fall in July
Analysis based on 63 articles · First reported Aug 14, 2026 · Last updated Aug 16, 2026
The unexpected drop in retail sales and weak consumer sentiment have raised concerns about consumer spending, leading to downward revisions in GDP forecasts and increased expectations that the United States — Federal Reserve will hold rates steady in September. Treasury yields fell and the dollar slipped, while stock markets were muted.
In July, U.S. retail sales fell 0.6%, the first decline in nine months and the largest drop since May 2025, according to the United States — United States Department of Commerce. The decline was driven by weaker sales at motor vehicle dealers, electronics stores, and online retailers, partly reflecting the fading boost from generous tax refunds and the earlier timing of Amazon (company)'s Prime Day. Excluding autos and gas, retail sales fell 0.2%. Consumer sentiment also deteriorated, with the University of Michigan index dropping to 51.0 in August. Inflation moderated slightly to 3.4% year-over-year, but remained elevated due to higher gas prices linked to the Iran conflict. The weak data led economists to lower third-quarter GDP forecasts, with Goldman Sachs cutting its estimate to 2.2%. Financial markets increased expectations that the United States — Federal Reserve will keep rates unchanged in September.
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