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. (NASDAQ: 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 (NASDAQ: WMT) said lower-income customers were becoming more budget-conscious, while Ralph Lauren Corp. (NYSE: 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. (NASDAQ: 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 (NYSE: 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.