Tariff-frontrunning ruffled the numbers earlier. That dust has settled.
By Wolf Richter for WOLF STREET.
Retail sales rose by 0.64% in June from May, to $720 billion, seasonally adjusted, after having fallen month-to-month in May and April, and after having spiked in March by 1.5% (+20% annualized). The March spike was driven largely at auto dealers due to tariff-frontrunning and a strong tax-refund season. Auto dealers are the largest category of retailers (19% of total retail sales), and they move the needle.
It’s this massive spike at auto dealers in March that caused the month-to-month spike in overall retail sales in March; and it’s the fall-off at auto dealers in April and May from that frontrunning that caused month-to-month retail sales to sag in those two months.
The four-month average – four-month is the extra-special measure today to capture the frontrunning and the drop-off from frontrunning – irons out these month-to-month squiggles. It rose by 0.3% in June from May, and by 4.3% year-over-year, solid growth, steady as she goes. Monthly in blue, four-month average in red:
Sales at auto dealers in dollar-terms jumped 1.4% month-to-month in June and were up 6.9% year-over-year, and so overall retail sales perked up again.
But the 1.4% jump in June, as big as it was, pales compared to the massive month-to-month surges in November, December, and March (blue line in the chart).
The four-month average (red) irons that out. It shows the surge in sales late last year and the slower growth so far this year:
Ecommerce (#2 retailer category, 17% of total retail) has been growing at a solid pace, and did so in June, up by 0.4% month-to-month to $125 billion, and was up by 4.5% year-over-year.
The three-month average – sticking to the classic three-month measure from now on – also rose by 0.4% month-to-month and by 6.8% year-over-year.
There is no sign of consumer weakness here, just growing at a solid pace.
In restaurants and bars (#3 category, 13% of total retail), sales jumped by 0.57% month-to-month to $99 billion, and were up 6.6% year-over-year.
The three-month average rose by 0.44% month-to-month and by 6.6% year-over-year.
It largely reflects discretionary spending – what people want to spend, and our Drunken Sailors, it turns out, have been splurging at those establishments.
Consumers have not backed off from doing stuff they want to do. The pace of growth picked up in recent months, after flat-lining in late 2024 and early 2025 (maybe due to particularly bad winter weather and the fires in Los Angeles).
At food and beverage stores (#4 category, 12% of total retail), sales rose by 0.5% in June month-to-month to $84 billion, and by 2.5% year-over-year.
The three-month average was unchanged in June from May, but year-over-year was up by 2.5%
Over the long term, more and more grocery sales have wandered off from grocery stores tracked in this category to other outlets, such as Walmart (which puts those grocery sales into “general merchandise stores” below) and to ecommerce (which puts those grocery sales into the “nonstore retailers” above).
In addition, food purchases have been moseying from supermarkets over to restaurants, a trend that has been playing out for decades among our Drunken Sailors.
At general merchandise stores (#5 category, 11% of total retail), sales rose by 0.5% month-to-month to $77 billion, and by 3.2% year-over-year.
Three-month average sales rose by 0.2% month-to-month, and were up by 2.7% year-over-year.
This category includes stores such as Walmart, which is also the largest grocer in the US, but not including their huge ecommerce sales, which are part of “nonstore sales” above:
At gas stations (#6 category, 7% of total retail), sales move in near-lockstep with the price of gasoline. The price of gasoline started heading lower in mid-2022 and has continued to move lower. And so have gasoline sales in dollar terms.
Sales in June were roughly unchanged from May, at $50 billion seasonally adjusted, and year-over-year were down by 4.4%.
Three-month average sales fell by 0.6% month-to-month and by 5.6% year-over-year (red).
The three-month CPI for gasoline fell by 0.6% month-to-month and by 10.7% year-over-year (dotted purple):
At building materials, garden supply and equipment stores (#7 category, 6% of total retail), sales jumped by 0.9% month-to-month to $40 billion, but year-over-year were down by 1.1%.
Three-month average sales fell by 0.4% month-to-month and were essentially flat year-over-year.
The pandemic-era remodeling boom was a beauty to behold. RIP.
At health and personal care stores (#8 category, 5% of total retail), sales rose by 0.5% month-to-month to $39 billion, and by 8.3% year-over-year.
Three-month average sales were unchanged month-to-month but were up by 8.2% year-over-year:
At clothing and accessory stores (#9 category, 4% of total retail), sales jumped by 0.9% month-to-month to $26 billion, and were up by 3.9% year-over-year.
Three-month average sales rose by 0.5% month-to-month and by 3.9% year-over-year.
So our Drunken Sailors are out there spending even as we speak, no matter how sour their mood may be. But the tariff-frontrunning in March had ruffled up the numbers in March through May. The dust is settling by about now, and so is the trend of consumers doing just fine – and why should they not, with unemployment at historic lows and wages rising well above the rate of inflation.
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Howdy Folks. Same old same old at our Squirrels Anonymous meetings. Drunk/Sober Sailors spending what we what, when we want. Saving more for large purchases later. I am personally waiting for Real Estate Purchases in about a year or two. Fun times……
Interesting how you state ‘real estate purchase..s”, as in plural.
I can’t get enough of the irony of “investors” waiting for a crash so they can “scoop up” houses, becoming part of the problem that caused the megabubble in the first place.
If we have a bona fide secular nominal house price collapse, it will likely be because flipping/BRRRing/scalping is no longer tenable, because we would be in another “toxic asset” regime.
Howdy Carlos. Foreclosed homes happen for many reasons. Even during the good times. So many people ruin their lives for some many different reasons. Some of US invest in ourselves and our own hard work to proper. I am coming out of retirement during Housing Bust 2 to make another fortune because of peoples stupidity…………???????
We shall see
When will the “Drunken Sailors” ever learn to live within their means? Credit card debt in the West has skyrocketed, and many people have 2, 3, even 4 cards to their name. In ratcheting up debt, the “Sailors” are destroying their own futures, risking their entire credit rating on a gamble and eating away what they’re going to pass on to the next generation.
The loss of good sense is a symptom of a mass society where the common herd, the average individual, seeks pleasure over sensibility, and where the wheels of commerce turn without regard for whether they are turning sustainably…
Goofball BS.
Credit cards are a universal payment method. Most people have several (Visa, MC, AmEx, etc.), and most people pay them off every month. No one writes checks at a grocery store anymore. And few people pay cash (I do, but I’m a fossil). But even I stopped paying cash in restaurants but they’re no longer prepared to deal with it; they just look at you funny, like, what you DOING??? It’s nearly all electronic payments today. Utilities are set up on automatic payment on credit cards, etc.
Balances are growing because there are more people (population growth) earning more money (employment and income growth) and spending more money, including due to inflation, and saving the rest.
And people collect their 1% and 2% cashback for every purchase. That’s just how people pay for stuff today.
And then the vast majority of credit card holders pay off their credit card balances by due date, and never incur interest. Over $5 trillion a year get paid with credit cards. And very little of it gets stuck as interest-bearing debt. Interest-bearing credit card balances are around $500 billion.
READ THIS:
https://wolfstreet.com/2025/05/20/credit-card-delinquencies-balances-debt-to-income-ratio-and-credit-limits-in-q1-2025-our-drunken-sailors-and-their-credit-cards/
It includes this chart:
I cannot believe people still post this goofball BS on this site!! Like they never ever read anything here.
My white knight
Nuh-uh! Not everyone collects cash back, Wolf! Some of us get frequent flyer miles. So there.
How about those cool coupons you can add to your card monthly.
Save 15% at jersey mikes subs
Or
5% back at McDonald’s
Those are fun, if you can control yourself
I’m the guy Wolf describes above. Two credit cards (because I need one just for Costco). I charge everything (but tips for servers which I always give cash), and pay it off every month. Together my limit would allow me to buy any number of new cars.
I’m retired, and have some friends also retired who eat out 4-6 nights a week. I do it 1-2x, and only in a social setting with friends.
Most of my purchases now come from Amazon because they’ve made it so simple, why actually go out to shop? I probably burn 20-30 gallons of diesel a month, if that. Most of Amazon purchases are vitamins, simple foodstuffs, gym shoes or similar. For Prime Days I just loaded up on more of the same on sale, plus a few ceiling fans.
My “splurges” this year have been musical instruments, used, which mostly hold their value. Done with that now.
Unlike a lot of Drunken Sailors, I’m pretty thrifty while residing in the top 5-10% of my age retirees. But then my restraint is how I got here, even after half flew out the window with divorce a few years back.
And I still have a kid to help with buying his first house… Oddly, (or maybe not so much) that kid is a big saver too.
Howdy Cyborg. Some Drunken/Sober Sailors are born because they do, ” Live within their means always” and is exactly why they can Sail no matter what Govern ment does or causes…..
My impression is that this is probably a result of TACO. Everyone was front running the tariffs at first and then clamped down expecting the worst. So far the worst hasn’t happened, and so we may be getting a second chance to buy stuff while the president is busy playing chicken with the economy.
My impression is that nope
Right wing commenters: “The economy is safe in the steady hands of a Businessman.”
The president today: “Feeling cute. Might fire Powell later lol idk”
I mean your comment is flying in the face of reality but okay. You people just wish Doom and gloom on it all the time and then when it doesn’t happen you think it’s just right around the corner?
We have full unemployment inflation isn’t that bad. Gas prices are down, retail sales were up and you people still find every excuse in the book to bitch about something
And how many times does a “reporter” citing an “anonymous source” need to be wrong?
Every time it is whispered, the president says he isn’t doing it. Until he actually does it, then just shut up
Yeah, inflation isn’t that bad unless you are trying to buy a house, or if you have a house, if you’re trying to pay for insurance.
TSonder305,
And that is hardly because of Trump and his policies. That has been going on for the last 3-4 years
Tariff revenue up +110% year over year.
Damn right wingers.
These people are truly blinded by their hatred of one person that they just can’t be happy when things are good
How about SOME sympathy, Eric? TDS can be painful for many, it is for me. There but for the grace of God go you. Please don’t just write me off….hope for help is possible isn’t it?
Wondering to what extent growth in consumer spending mostly represents inflation, i.e. we are generally buying the same stuff but it costs more.
I’m glad you didn’t make the stupid-ass mistake of adjusting retail sales — sales of goods — to the overall inflation rate which is dominated by services, and inflation is mostly in services, but retailers don’t sell services.
If you want to adjust goods sales to inflation, you HAVE to adjusted them to inflation in goods (if any). If you want to adjust services sales to inflation, you have to adjust them to inflation in services. So you HAVE to adjust new vehicle sales to new vehicle inflation. If you adjust new vehicle sales to overall inflation, dominated by services, you made a stupid-ass mistake that only morons make. So I’m very glad you didn’t make this stupid-ass mistake.
There is little inflation in goods. And there is deflation in vehicle retail sales. Inflation is in services.
Read this. It has the data and charts:
https://wolfstreet.com/2025/07/15/feds-nightmare-cpi-inflation-in-services-reheats-not-tariffed-while-inflation-in-durable-goods-apparel-footwear-tariffed-remains-cool/
So why this “obsession” with cutting short term rates?? Sincere question. Seem the best would be to “let sleeping dogs lie”.
Just make sure you make that monthly payment on your credit card dept, in full, once a month, and get 2% savings.
If you don’t? You are spiraling.
Wolf:
It would be interesting to have some idea about the volume of auto sales and how price and volume are feeding into total sales.
Despite Ugliness at Stellantis, Nissan & Tesla, New Vehicle Sales in Q2 Rose to the Best Q2 since 2021. But June Stalled
https://wolfstreet.com/2025/07/02/despite-ugliness-at-stellantis-nissan-tesla-new-vehicle-sales-in-q2-rose-to-the-best-q2-since-2021-but-june-stalled/
Wolf,
Trump just raised the tariffs on Japan and Korea to 25% and Canada, EU, Mexico to 30%. Will that hurt the consumers since companies can’t eat that much tax?
GM already said it cannot raise prices, and it will eat $5 billion this year. Ford has put the total at $2 billion. Just listen to their earnings calls instead of imagining nonsense.
Hondas and Toyotas are among the vehicles with the most US content and least hit by tariffs. Automakers CUT prices in June despite the tariffs because it’s tough out there, demand is not strong, prices are VERY high, and have hit a ceiling, and automakers realize they cannot raise prices without killing their sales.
They’re also reacting by shifting production vehicles and components to the US. That has already started. GM for example is already shifting production from Mexico and Canada to existing plants in the US, and it’s slowing production at its Mexican plants.
It’s kind of funny all of the people who miss the boat with all their doom and gloom. I’ve been buying Bitcoin stocks and real estate since 2013 and everyone was convinced the world was going to end. I’m now wealthier than anyone could ever imagine and don’t have a care in the world it goes to show that you can’t believe mainstream media and you have to think for yourself about trends and where money is flowing.
” I’m now wealthier than anyone could ever imagine”. Do you have a billion-trillion-gazillion dollars? Or maybe 10 to the 100 dollars?
“Don’t have a care in the world”?
Hmmmmm…..,glad your health is perfect/you do not see the possibility of major wars/civil strife in country,the list goes on.
I get we need to live for the moment and try and move forward…., try but do have some cares/concerns even though I am well enough off finacially.
“Siri, make note: On this day, plans foiled by imagination. How could I have been so short sighted?!”
😆
Many of the tariffs have not kicked in as negotiations continue. It will take some time to see their impact on inflation. I am guessing we will see tariff impacts on inflation, if any, maybe in October, unless significant negotiations continue after August 1. The front-running is probably over.
I am amused by Trump’s constant attacks on Powell. Trump says the economy is strong and inflation is low (well, it is been stuck at around 2.5% for a while). If the economy is strong, and inflation is above the 2% target, the Fed should actually raise rates. Trump should also realize that lowering short term rates, which is all the Fed can do, will raise long-term rates. I agree with most of his policies, but he is a real bonehead when it comes to interest rates. He should STFU about them.
“Many of the tariffs have not kicked in as negotiations continue”
Lots of tariffs have already been COLLECTED:
https://wolfstreet.com/2025/07/01/tariff-cash-is-rolling-in-junes-record-take-spikes-by-20-5-billion-year-over-year/
From Wolf’s graph, it looks like about $96 billion has been collected so far this year, or about .33% of 2024 GDP, which was $29 trillion. Probably not enough to make much impact on inflation. Morgan Stanley is projecting about $270 billion a year in tariffs for the next ten years. $270 billion is .93% of 2024 GDP, a percentage which might have an impact on inflation. It all depends on how much businesses are going to eat and how much they will pass on to the consumer. In general it looks like tariffs will not likely have much impact on inflation. It’s services inflation that we have to worry about, not tariffs so much. BTW, if lots of companies have to eat the tariffs, which they probably will, their profits will drop, and Wall Street will be unhappy.
From these numbers and charts, there’s no real case for recession based on retail sales. Are these numbers adjusted for inflation…I doubt it. We’ve got inflation and it’s more than 2%. So retail spending is going up, but so are prices.