U.S. Retail Sales Fall 0.9% in May Amid Trade War Slowdown

U.S. retail sales fell 0.9% in May 2025, marking the second consecutive monthly decline and signaling caution among consumers amid ongoing trade tensions and tariff-related uncertainties. The steep drop was primarily driven by a 3.5% fall in automobile sales following an earlier buying surge to beat tariffs imposed by President Donald Trump, with car purchases accounting for a significant share of retail activity. Excluding autos and gasoline, retail sales showed a modest decline or slight growth depending on the measure, reflecting more mixed results across other sectors. Restaurant sales also dropped nearly 1%, the largest decline in over two years, indicating consumer apprehension possibly tied to economic uncertainty. Despite the decline, some indicators like the control group of retail sales suggest underlying consumer spending is still contributing to GDP growth, although the overall trend points to increased caution and potential economic headwinds. Policymakers and investors remain vigilant, as sustained drops in retail spending could signal broader impacts on the U.S. economy.