Market commentator The Kobeissi Letter said U.S. consumers are becoming more cautious with their spending after July retail sales fell more than expected.

In a post on X on Sunday, The Kobeissi Letter pointed to July retail sales data showing a 0.6% monthly decline, compared with expectations for a 0.1% increase. It said the decline was the largest monthly decrease since May 2025. The data was released by the U.S. Census Bureau on Friday.

U.S. retail sales declined to $763.6 billion in July after a revised 0.2% increase in June, according to the Census Bureau. Sales were still up 5% from a year earlier.

The largest monthly decline came from nonstore retailers, where sales fell 2.2%. The category includes online retailers such as Amazon.com Inc. (AMZN  ). Motor vehicle and parts dealer sales also fell 1.8%.

Excluding autos, retail sales declined 0.3%, compared with expectations for a 0.2% increase.

Control-group sales, which exclude food services, auto dealers, building materials stores and gas stations, fell 0.4%. The measure feeds into the calculation of consumer spending used in gross domestic product estimates.

The 2.2% decline in nonstore retailer sales was the second-largest since July 2021, while the 0.4% drop in control-group sales was the largest since January 2025, according to The Kobeissi Letter.

Consumer Spending Shows A Split

Recent corporate commentary has shown differences in consumer behavior across income groups. Walmart Inc.'s (WMT  ) said lower-income customers were becoming more budget-conscious, while Ralph Lauren Corp. (RL  ) said its core consumer remained resilient.

National Retail Federation chief economist Mark Matthews said lower-income consumers had increased spending from a year earlier, while warning that softening wage growth and sticky inflation could weigh on spending.

The Trade Desk Inc. (TTD  ) also cited weaker spending among lower-income consumers as one factor weighing on advertising categories such as consumer packaged goods and automotive. The company said higher-income consumers remained resilient.

Online Spending

The decline in nonstore retail sales also follows strong online spending during Amazon's Prime Day event. U.S. online spending across retailers reached $26.4 billion during the four-day event from June 23 through June 26, according to Adobe Analytics. Spending increased 9.3% from the previous year's event, with promotions from Amazon, Walmart and Target Corp (TGT  ).

The event also highlighted consumer demand for discounts. Analysts cited in the report said shoppers were buying planned purchases during promotions and looking for ways to stretch their spending.