Retail Sales Show Strength The Headlines Are Missing

Aug 17, 2026 10:09 PM - 1 day ago 1

Consumers support confounding the economy’s punishment merchants. A speedy look astatine the existent numbers released by the Census Bureau belies the AP’s headline: “US Retail Sales Slump Unexpectedly and Sharply aft a Summer Tax-Refund Boost Fades.” Or this 1 from the Wall Street Journal: “Weak Retail-Sales Number Adds to Softening Economic Data.”

GlobalData managing head Neil Saunders puts it plainly: “When it comes to the reporting of unit sales, ne'er has truthful overmuch uncertainty rested upon truthful overmuch falsehood.”

Yes, arsenic reported, month-over-month adjusted unit income fell -0.6%, but the existent numbers—consumers don’t walk successful seasonally adjusted terms—rose 0.9%. That summation is moreover much singular since Amazon Prime Day and different related promotional events were held successful June this year, not July arsenic past year. In 2025, July month-over-month spending roseate only 0.4%.

As if the month-over-month measures moreover matter. Year-over-year comparisons show the existent story. In July, full unit income were up 5.2% from past year, climbing from $777.6 cardinal to $784.6 billion—or 4.9% excluding automobiles and state stations. Higher state prices elevated state position income by 16% for the month. And while galore analysts exclude nutrient services from the unit baseline, edifice income roseate 5.9% successful July, a powerful parameter of consumers’ discretionary spending.

Through the first 7 months of 2026, unit income are up 5.2% to $5.2 trillion. By comparison, astatine this constituent past year, income grew 4.1% to $4.95 trillion. Inflation—3.4% coming versus 2.7% a twelvemonth ago—factors into the equation. But erstwhile ostentation is removed successful some periods, this year’s 1.8% existent maturation outpaces past year’s 1.4%.

Vibrant Back-To-School And College Spending Forecast

With only 5 much months successful the twelvemonth to go, the National Retail Federation’s forecast for record-breaking back-to-school and assemblage spending looks progressively secure. Back-to-school is expected to present $43.3 cardinal to retail, up 11% complete past year, while back-to-college is projected to scope $103.5 billion, a astir 17% increase.

BTC will springiness a needed boost to location furnishings retailers—the only unit conception that is trailing 2025, down astir 2%. Some 13% of BTC spending will spell toward outfitting dorm rooms.

The largest stock of some BTS and BTC spending will beryllium tech-driven—34% and 27% respectively. Electronic stores, up 6.4% this year, and non-store retailers, up 10.2%, will use most, on pinch wide merchandisers, moving 3.3% up of past year.

Clothing and accessories retailers will besides get a boost during the season. They are already up 5.8% twelvemonth to date, and moreover section stores person begun to reverse years of declines pinch a humble 0.1% summation truthful acold this year.

And erstwhile the kids aren’t hitting the books aliases computers, they’ve been spending connected sporting equipment and hobbies this year. Retail income successful that conception are up 10.4% year-to-date.

NRF vice president of user and manufacture insights Allison Zeller highlighted the value of the season. “It’s regarded arsenic the past awesome publication we get connected the user earlier we caput into the wintertime holidays,” she shared. And while study information shows consumers person pulled guardant BTS and BTC purchases, she added, “There’s decidedly much firepower near successful the season.”

All told, if consumers walk arsenic planned, BTS and BTC will adhd $146.3 cardinal to the unit economy, up from $128.2 cardinal past year—a striking 14% uptick. And Zeller besides reported that user budgets for each awesome shopping arena truthful acold this year, isolated from for graduations, are moving up of 2025, including a 14% summation for some Mother’s and Father’s Day.

Is Consumers’ Appetite Bigger Than Their Budget?

Even arsenic unit income stay remarkably strong, user sentiment fell 8% successful August to 51 points connected the University of Michigan’s 100-point baseline index. However, it noted that astir of the diminution reflects interest astir wide business conditions pinch consumers’ views of their individual finances only slipping slightly.

Inflation worries measurement astir heavy connected the sentiment of older consumers, lower-income consumers, and those without a assemblage degree—and could yet put a region connected higher-income user spending arsenic well.

NRF main economist Mark Mathews noted that passim astir of 2003 done 2005, costs maturation outpaced inflation. But today, existent costs maturation is efficaciously astatine zero—even pinch inflation—due to rising prices, particularly gasoline.

“This creates a spot of a business wherever it’s difficult for the user to proceed spending more,” he said. “The cardinal point present is that ostentation is going to play an important domiciled successful the consumer’s expertise to support connected spending astatine the complaint that we’ve seen successful caller years.”

Mathews remains hopeful that ostentation will soften arsenic the twelvemonth progresses, but added, “There’s small logic to judge that costs maturation is going to emergence overmuch higher than existent levels.”

He besides warns that the existent savings complaint is nearing grounds lows astatine 3%—far beneath the semipermanent mean of 8.4%—which could coming challenges ahead. “The connection present is that the user is really choosing to walk alternatively than to save,” he shared.

“You tin position that arsenic a affirmative that consumers are comfortable capable that they tin opt to support spending and not prevention for a rainy day, but location is simply a spot of interest erstwhile consumers person to scope into savings aliases prevention little successful bid to spend,” he added.

He besides observed that in installments paper balances and delinquencies are astatine near-record levels, though the modulation to superior delinquencies has started to ease. Mathews concluded, “Access to in installments is not a awesome issue.” And the caller buy-now-pay-later options are giving consumers much elastic ways to support shopping.

Looking Ahead

While Mathews didn’t get retired complete his skies connected what the remainder of the twelvemonth mightiness bring, GlobalData’s Saunders feels assured that unit will proceed to execute powerfully done the vacation season.

“The outlook for the remainder of the 2nd half and the important vacation play looks solid,” he said. “Consumers are picky, choosy and finnicky—but they’re besides wished and very reluctant to trim their value of surviving by curtailing spending connected some the things they need, and the things they want.”

There’s nary uncertainty that consumers are flashing mixed signals. “Americans consciousness comparatively gloomy astir the system and are still broadly dissatisfied astir the costs of living,” Saunder said, adding, “We besides spot an expanding cognition of throwing be aware to the wind.”

Yet, a due reference of the unit information shows thing but the “wall of gloom,” arsenic Saunders put it, that caller sum suggests. “The connection of diminution rests connected looking astatine an incredibly bad mentation of the numbers,” he asserted. “To dissect them properly, you astatine slightest request to commencement from the correct numbers and that is made harder by the disruptive inheritance noise.”

The latest Census Department study shows singular resilience among consumers, nary matter really gloomy they feel. And they are acold from distressed. “It will apt return a much wide and wider economical shock—which cannot beryllium discounted—to rustle the user firmly disconnected course,” Saunders concluded.

That daze has yet to materialize and, location is small denotation it will successful the months ahead.