Back-to-School Spending Boosts Retail Sales 0.6% Amid Job Weakness/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. retail sales grew 0.6% in August, boosted by back-to-school shopping and resilient consumer demand. The gains came even as tariffs imposed by President Donald Trump pushed prices higher and slowed job growth. Economists warn inflation and unemployment pressures could test consumer strength in the months ahead.
Retail Sales August 2025: Quick Looks
- Monthly Growth: Retail sales up 0.6% from July.
- Excluding Autos: Sales rose 0.7%; autos and parts climbed 0.5%.
- Category Gains: Clothing up 1%, restaurants up 0.7%, online sales surged 2%.
- Back-to-School Impact: Strong spending on clothes and electronics led the way.
- Tariffs’ Toll: Costs rising on imported goods, especially cars and consumer products.
- Inflation Pressure: Consumer prices jumped 2.9% year-over-year, fastest since January.
- Jobs Weakening: Just 22,000 jobs added in August; unemployment at 4.3%.
- Fed Challenge: Central bank weighing rate cuts despite stubborn inflation.
- Retailer Reports: Walmart, Macy’s, Best Buy note selective shoppers, modest price hikes.
- Future Concerns: Executives warn costs will rise as inventories are replenished post-tariffs.
Deep Look: Retail Sales Rise in August as Tariffs and Inflation Squeeze Consumers
NEW YORK (AP) — American shoppers opened their wallets in August, lifting retail sales by 0.6% from the prior month, according to Commerce Department data released Tuesday. The stronger-than-expected gain highlights the resilience of U.S. consumers even as tariffs and inflation strain household budgets.
Back-to-School Surge Fuels Spending
Economists credited back-to-school shopping for much of the spending boost, with clothing and electronics sales both notching healthy gains. Clothing stores saw sales climb 1%, while electronics and appliance stores added 0.3%. Online retailers posted a 2% jump, reflecting continued e-commerce growth.
Restaurants, often seen as a gauge of discretionary spending, also saw 0.7% growth, indicating that households are still willing to dine out despite higher prices.
“This is further evidence that we shouldn’t underestimate the strength of the consumer,” said Ted Rossman, senior analyst at Bankrate.
Auto Sales Remain Volatile
Excluding autos, sales rose 0.7%, but cars and parts themselves gained 0.5%. Vehicle sales have swung sharply since Trump imposed tariffs on foreign-made cars, which rattled supply chains and raised sticker prices.
Inflation Inflates the Numbers
The Commerce Department figures are not adjusted for inflation. Prices rose 0.4% month-over-month, faster than July’s 0.2% pace, meaning some of the sales growth may reflect higher costs rather than higher volumes.
Year-over-year, consumer prices rose 2.9%, the largest increase since January, while core inflation (excluding food and energy) rose 3.1% for the second straight month. Gas, groceries, and airfare were key drivers.
Jobs Market Slumps
While consumers are spending, the job market is faltering. Employers added just 22,000 jobs in August, sharply below forecasts of 80,000 and down from 79,000 in July. The unemployment rate ticked up to 4.3%, its highest since 2021.
The weak labor market complicates the Federal Reserve’s task as it prepares to cut interest rates this week, balancing economic support with persistent inflationary pressures.
Retailers Adapt to Tariffs
Retailers have thus far shielded shoppers from the full brunt of tariffs by ordering inventory early and absorbing costs. Giants like Walmart and Macy’s reported continued demand but acknowledged being more selective with price increases.
“Consumers haven’t felt the big sting yet,” Walmart CEO Doug McMillon told analysts, but he warned costs would rise as new inventory reflects higher tariff levels.
Other companies echoed similar concerns. Jewelry maker Pandora has not raised prices but acknowledged that tariffs will eventually flow to customers.
“The U.S. consumer will eventually have to bear the brunt,” said CEO Alexander Lacik.
Outlook: Can Consumers Keep Carrying Growth?
For now, gradual price increases and steady demand have kept spending afloat. But with inflation, unemployment, and tariffs converging, economists caution the consumer-driven economy could hit turbulence in the months ahead.
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