Washington (AP) – Retail sales fell sharply in May High tariffs Almost all imported.
Department of Commerce’s retail stores and restaurant sales fell by 0.9% Said TuesdayAfter a 0.1% drop in April. The sharp drop in auto sales knocked out the number after Americans stepped up car purchases in March to lead Trump’s 25% responsibility for imported cars and auto parts. Excluding cars, sales fell by 0.3%.
After a sharp drop, sales decline is falling Consumer confidence this year. Still, inflation has cooled steadily and unemployment remains low, which could promote stable spending in the coming months as the economy remains largely stable.
Sales, sales categories that exclude volatility sectors such as gasoline, automobiles and restaurants rose 0.4% last month, suggesting consumers are still spending certain items at their disposal.
Overall, the report shows that consumers are retreating a little, but that is not the case. The retail report covers about one-third of consumer spending, and the other two-thirds include service spending. Economists expect overall consumer spending to grow in the April-June quarter.
“Today’s data suggests that consumers are downshifting, but have not yet slammed the brakes,” he said. Morgan Stanley Wealth Management said in an email. “Just like the economy as a whole, consumer spending is flexible in the face of tariff uncertainty.”
However, the decline in many categories has dropped dramatically. Auto sales fell 3.5%, while sales at home and garden centers fell 2.7%. They fell 0.6% in electronics and appliance stores and 0.7% in grocery stores. There are some bright spots: Online retailers saw sales rise by 0.9%, clothing stores saw sales rise by 0.8%, and furniture stores saw sales rise by 1.2%.
Sales of restaurants and bars are a closely watched indicator of disposable spending, down 0.9% in May, despite steady earnings of 0.8% in April.
It’s a tough time for retailers, after Trump warned that he would impose a wide range of import taxes, many of whom built large stocks this spring. Traffic has dropped sharply in Los Angeles ports in recent weeks, indicating that there are fewer goods entering the United States.
Some consumer product companies say they are seeing the impact of tariffs on their own costs and sales.
Paul Cosaro, CEO Picnic timeThat makes retailers orders drop 40% this summer, such as picnic accessories, coolers and folding chairs, say compared to a year ago. His company was sold to various stores Target and Williams Sonoma.
Cosaro notes that some stores have been cautious because they are not sure how shoppers react to higher prices. Some cancellations are because Cosaro can’t tell them what the new price is due to all the uncertainties. About 80% of the company’s goods are produced in China, and the rest are in India and Vietnam.
Founded 40 years ago, California-based Moorpark, Casaro said the company was forced to increase its prices from an average of 11% to 14% from this summer sales season.
He added that the foldable outdoor chairs are now priced at $137 this month, up from $120 at the end of 2024. Even as some shoppers accelerated their purchases due to rising prices, the company’s sales are still falling this year.
“Shoppers are very sensitive to prices,” Casaro said.
He added that the company has implemented a hiring freeze due to all the additional tariff costs. So far this year, the company has hired between 70 and 100 employees and has had to pay $1 million in tariffs. A year ago, at this time, the bill was one-third of the amount.
Other evidence from the retail report suggests shoppers have been backing down due to concerns about rising Trump’s tariff prices.
Naveen Jaggi, president of America Retail Consulting Services, said he heard from shopping malls that sales are slowing into the official summer. He said retailers will push back-to-school promotions to this month starting in July. He said they want to attract shoppers as early as possible because of concern that consumers may not want to spend within months when prices rise.
So far, Trump’s tariffs have not raised inflation. Consumer prices rise only May 2.4% The government said last week compared to a year ago.
Many stores and brands, including Walmartlululemon and JM Smucker The company said they planned or raised the price of tariffs.
deckers outdoorLate last month, behind shoe labels such as Hoka and Uggs were planned to rise, which could hurt sales.
“We want to absorb a portion of the tariff impact,” Chief Financial Officer Steven Fasching told analysts. “We also think there is a possibility to see a combination of demand erosion and general softness in a consumer spending environment.”
