Retail sales rise a better-than-expected 1.2% in August after shoppers pulled back spending in July

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Key points

• News Anne D'Innocenzio, Associated Press, Cathy Bussewitz, Associated Press July 23, 2026.
• FILE – Shoppers stop their carts to observe big-screen televisions on display in a Costco warehouse Thursday, April 30, 2026, in Timnath, Colo.
• Retail sales rose a better-than-expected 1.2% last month after recording a revised 0.5% dip in July, according to Commerce Department data published Wednesday.
• The Labor Department remarked Friday that the consumer rate index rose 3.4% last month compared with a year ago, the same as in July.
• General Atomics confirmed second expansion this year, bringing 125 more jobs to Shannon.

Retail sales rise a better-than-expected 1.2% in August after shoppers pulled back spending in July. By: Anne D'Innocenzio, Associated Press – September 16, 2026.

FILE – Shoppers stop their carts to observe big-screen televisions on display in a Costco warehouse Thursday, April 30, 2026, in Timnath, Colo. (AP Photo/David Zalubowski, File).

Consumers may be griping regarding higher costs at the pump and elsewhere, but they keep spending, helping to power the economy, according to the latest administration snapshot.

Retail sales rose a better-than-expected 1.2% last month after recording a revised 0.5% dip in July, according to Commerce Department data published Wednesday. Economists were anticipating a 0.7% gain for the month, according to FactSet.

For context, the decline in July was notable since there had been few signs of fatigue from U.S. Consumers. Americans spent heavily during the World Cup and Amazon Prime Day sales this summer. That followed heavy retail traffic in April and May as Americans dipped into their administration tax refunds.

Even excluding business at gas stations, retail sales rose 1.1% in August, underscoring the resilience of the American consumer. The administration figures aren't adjusted for inflation.

Meanwhile, the report indicated that American consumers were spending on a broad set of goods from furniture and clothing to cars.

As the report notes, business at motor vehicle and auto parts dealers rose 0.6% last month.

While furniture and home furnishings stores saw a 0.9% growth, sales at clothing and accessories stores were up 0.7%. Online retailers registered a 2.6% gain.

Notably, the data offers only a snapshot of consumer spending and doesn't include activities like travel and hotel stays. But the lone services category – restaurants – additionally registered a solid gain.

In practice, the so-called control group-which excludes food services, autos, building materials and gas station sales and is applied to calculate economic expansion – rose a solid 1.4% last month from the prior month.

Plenty of Americans continue to spend despite skyrocketing gas costs that have accompanied renewed fighting in the Middle East. The average cost for a gallon of regular gasoline rose overnight to $4.37 on Wednesday, according to motor club AAA. When it cost less than $3, that is regarding 47% more than a gallon cost before the war began.

Diesel, which has an outsized impact since it's employed for shipping, transportation and manufacturing, has risen even faster, up 68%.

For context, the Labor Department documented Friday that consumer costs rose 3.4% last month from a year earlier, and they're up 0.4% from July, quadrupling the 0.1% registered in the previous month.

Still, Americans have grown more selective regarding what they purchase, according to retailers who posted their quarterly financial results previously few weeks, but some, like Walmart and Macy's, are using some of their tariff refunds from the administration to lower costs.

Macy's received $116 million in tariff refunds from the administration, Macy's CEO Tony Spring stated, and some of those proceeds are being applied to lower costs on certain big-ticket items like furniture and fine jewelry.

Executives at the National Retail Federation, the nation's largest retail trade group, remarked that retail sales have been better than anticipated this year.

Mark Mathews, chief economist at the NRF, additionally observed he's seeing a softening of the K-shaped spending trends – the upper part of the K refers to higher-income Americans seeing their incomes and wealth rise while the bottom part points to lower-income households struggling with weaker income gains and steep rates.

"We have a consumer that's willing to spend, and up until this point, we have had a consumer who's been able to spend, " Mathews remarked. "Now looking forward that looks a little bit more challenged because if gas prices remain high, then you know you have to start questioning where the consumer is going to fund that spending growth from." Regarding the Author(s). Anne D'Innocenzio, Associated Press. Economy Christopher Rugaber, Associated Press September 15, 2026.

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For context, the Federal Reserve is widely projected to lift its short-term interest rate for the first time in three years to fight stubbornly high inflation. More From This Author.

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In practice, the Labor Department remarked Friday that the consumer rate index rose 3.4% last month compared with a year ago, the same as in July. As costs jumped 0.4% from July to August, up from an growth of just 0.1% the previous month, but on a monthly basis, inflation accelerated. News Christopher Rugaber, Associated Press September 10, 2026.

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Taken together, the developments around retail sales rise a better-than-expected 1.2% in August after shoppers pulled back point to a situation that is still moving, and the coming days should bring more clarity.