US Consumer Spending Stays Robust in 2025: June Data Surprises Economists

Key Highlights

• US retail sales remained steady in June 2024, surpassing economists' predictions of a decline.
• Disrupted motor vehicle sales due to a cyberattack impacted data accuracy.
• Retail sales figures contributing to GDP calculations suggest a stronger-than-anticipated second quarter.

Contrary to forecasts of a sales dip in the latter half of 2024, American consumers continue to demonstrate robust spending habits.

While many experts anticipated a slowdown in consumer purchases for June, recent retail sales data showed no change. Moreover, the Census Bureau revised May's figures upward by 0.2 percentage points, indicating a 0.3% month-over-month increase.

Scott Anderson, Chief US Economist at BMO Capital Markets, remarked, "The US consumer shouldn't be underestimated just yet."

Consumers Defy Expectations with Continued Spending

Strong retail sales were pivotal in helping the US economy avoid recession in 2023 and have maintained momentum into 2024, despite concerns about potential deceleration later this year.

However, questions remain about the sustainability of consumer spending moving forward.

Bret Kenwell, US Investment Analyst at eToro, noted, "Although this is a single data point, it challenges the narrative that consumers are under excessive financial pressure."

Economists also highlight that motor vehicle sales were artificially suppressed due to a cyberattack on dealership systems, which caused delays in sales recording, expected to be corrected in July.

"The cyberattack led to manual sales recording, temporarily holding back motor vehicle numbers," Anderson explained.

Ongoing Consumer Spending Could Propel Economic Growth

The 'control group' portion of retail sales data—which excludes volatile sectors such as motor vehicles, gasoline, restaurants, and building materials—rose by 0.9% in June, indicating robust core retail activity.

Ben Ayers, Senior Economist at Nationwide, stated that this growth combined with easing inflation pressures could yield higher GDP growth than previously forecasted.

Continued strong consumer spending is beneficial for the US economy and unlikely to raise significant concerns for the Federal Reserve, which is anticipated to reduce interest rates at its September 18 meeting.

Bill Adams, Chief Economist at Comerica Bank, commented, "Resilient economic growth provides the Fed with the flexibility to focus on inflation control during their rate-setting decisions."

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