Analysis: Retail Sales Fall as Shoppers Retreat From Big Purchases After Tariff Rush

The tariff-induced spending splurge may have come to an end.

In May, retail sales slipped 0.9%, adding to a revised 0.1% decline in April, according to the Census Bureau.

And though the big-ticket items saw a retreat, key categories of discretionary spending declined as well, though others showed gains — painting at best a mixed portrait of a consumer pressured by the “front loading” that marked earlier months, now taking a pause where they can.

The latest reading was worse than the 0.7% dip that had been expected, falling to $715.4 billion.

Retail sales have fallen by 0.7% since December. Despite this downward trend, retail sales were still 3% higher compared to May 2024,  but the pace of the gains is slowing.

Some Bright Spots, Including Online Sales

Among specific industries, furniture and home furnishing stores performed exceptionally well in May, with sales rising by 1.2% to reach $11.8 billion. These stores have accumulated $55.8 billion (non-adjusted) in sales for 2025 so far. Compared to May 2024, sales in this sector have increased by 8.8%.  Clothing and accessories stores recorded $26.2 billion in sales in May, an increase of 0.8% from April, marking the third consecutive month of growth.

Other industries that experienced positive trends included sporting goods, hobby, musical instrument and book stores, which saw sales rise by 1.3% in May and 1.8% year-over-year.

Non-store retailers, a category that includes but is not limited to online retailers,  continued to set all-time monthly sales records since February 2025, reaching $125.5 billion in May, a 0.9% increase from April and an 8.3% jump compared to May 2024. The read across here is that consumers may have been taking advantage of Memorial Day sales and promotional activity.

Where the Spending Wasn’t

However, several sectors faced contractions. Motor vehicle and parts dealers saw sales decline by 3.5% in May, following a 0.6% drop in April, with total sales falling to $135.8 billion nearly $6 billion less than in March. Building materials and garden equipment dealers experienced a 2.7% decline in May sales, down 1.1% compared to May 2024. Electronics and appliance store sales also fell by 0.6% in May, with total sales of $7.6 billion, representing a 1.9% year-over-year decrease. Health and personal care retail sales were 0.1% lower.

Notably, spending at restaurants and bars was 0.9% lower, reversing positive trends seen in the previous two months. Grocery store sales declined for the third consecutive month, dropping by 0.8% in May. After a strong start to the year, sales for this category fell to $75.3 billion, 0.4% lower than in December.

Consumer budgeting, then, seems to be dampening at least some movement to get out and about and dine with friends and family.

Looking Ahead

The spending picture may not brighten much in the near term. As PYMNTS reported this past week, consumer sentiment saw a moderate rebound in June, according to the University of Michigan.

Despite the rebound, sentiment remained below pre-tariff levels, and the improvement was most noticeable in the Expectations sub-index, which rose 22% but remained 20% below the December level.

PYMNTS Intelligence’s own data indicates that across all consumers surveyed last month, 37% said they were buying less overall; 25% said they were buying items in smaller quantities and 32% said they’d cut back or postpone going out to eat or traveling.

The summer months seem to offer no guarantee of heating up the registers for retailers.