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Seasonally adjusted sales dropped 0.9% in May to $715.4 billion, the US Census Bureau said on Tuesday, June 17. That was even worse than the 0.6% decline forecasted by the Dow Jones consensus, CNBC reported.
The tumble followed a downward revision for April, which is now listed as a 0.1% decrease. Compared to last May, sales were up 3.3%, but momentum appears to be slowing.
The steepest decline came from auto sales, which fell 3.5% in May.
"Americans bought cars in March ahead of tariffs and stayed away from car dealerships in May," Navy Federal Credit Union chief economist Heather Long told CNBC. "Families are wary of higher prices and are being a lot more selective with where they spend their money. People are hunting for deals and aren't eager to buy unless they see a good one."
The US auto industry has been shaken by Trump's tariffs, especially his 50% duty on aluminum and steel imports. Car shoppers' fears over rising prices sparked panic buying in the spring, shrinking the country's vehicle supply back in April.
The dip was broader than just cars.
Sales excluding autos dropped 0.3%, missing expectations for a slight gain. Gas stations, building material stores, and electronics retailers also posted declines from April.
The sales slowdown is the latest troubling economic indicator in Trump's return to office. The nation's gross domestic product fell 0.3% in the first three months of 2025, the first decline in three years.
Big box stores like Walmart and Target have warned about price hikes on certain items due to Trump's tariffs. Home goods retailer At Home filed for bankruptcy on Monday, June 16, citing Trump's wildly changing trade policies as a major factor in the company's financial troubles.
Aluminum and steel tariffs have even caused canned food producers to send warnings about escalating costs. Earlier in June, Campbell's president and CEO Mick Beekhuizen said Americans are cooking and eating at home in the largest numbers since the start of the COVID-19 pandemic in 2020.
Higher costs are reshaping shopping habits. While it slightly increased in May, the University of Michigan's closely watched consumer sentiment index has hovered near historic lows throughout 2025.
Even as overall sales rose year-over-year, categories like electronics and gas showed yearly declines. Clothing sales edged up 3.9%, while online retailers led the pack with an 8.3% increase from last May.
The next update on retail sales is scheduled for Wednesday, July 17.
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