US Retail Sales Fall 0.9% in May Amid Tariff Impact

U.S. retail sales fell sharply by 0.9% in May, marking the largest monthly decline since January and exceeding economists' expectations. The drop was largely driven by a 3.5% slump in motor vehicle and parts sales, as consumers pulled back following a surge in March purchases made ahead of President Donald Trump's 25% tariffs on imported vehicles and parts. While overall sales declined, the control group, which excludes volatile categories like autos, gasoline, building materials, and food services, rose 0.4%, suggesting underlying consumer spending remained solid despite growing trade uncertainty. Other sectors such as online sales and furniture retail showed modest gains, yet broader consumer caution persists amid geopolitical tensions and tariff-induced price uncertainty. The Federal Reserve is expected to hold interest rates steady, wary of inflationary pressures linked to tariffs and recent oil price increases. Market reactions were cautious, reflecting concerns about the impact of these factors on economic growth and consumer confidence.