Retail Sales Stall as Paycheck-to-Paycheck Pressure Builds

After weeks of delay, a fresh wave of government data is finally offering a clearer snapshot of how consumers and workers in the United States have weathered months of tariff uncertainty, higher interest rates and uneven job growth heading into the holidays.

The picture that emerges is neither collapse nor comfort.

Retail spending has stalled, labor market momentum has cooled, and income volatility remains a defining feature of daily life for most Americans.

Together, the data suggest resilience that is real but increasingly fragile.

Paycheck-to-Paycheck Living Remains the Norm

Retail sales data from the Census Bureau and jobs data from the Department of Labor , both released Tuesday (Dec. 16), cover the periods dovetailing with PYMNTS Intelligence’s surveys of consumer views of their finances and job prospects in October and into November.

According to the November edition of PYMNTS Intelligence’s New Reality Check: The Paycheck-to-Paycheck Report , 66% of U.S. consumers lived paycheck to paycheck in October, a level that has remained stubbornly elevated.

More striking is the reason behind that financial posture. The report found that 42% of consumers now live paycheck to paycheck out of necessity rather than choice, an 18% jump since August. What once hovered near 60% two years ago has now settled consistently in the mid-60% range, reflecting a structural shift rather than a temporary squeeze.

Income instability is a central driver. Six in 10 consumers earn their primary income outside a fixed salary, relying instead on hourly wages, gig work or contract arrangements, the report said. Among consumers struggling to pay bills, more than seven in 10 depend on non-salaried income, making cash flow harder to predict even when employment is intact.

Tariff-related uncertainty, layoffs and funding pullbacks across sectors have further eroded income predictability. Even small disruptions can push households from managing expenses to struggling to make ends meet, a dynamic that limits consumers’ ability to plan, save or absorb shocks, the report revealed.

Retail Sales Flatten as Spending Becomes Selective

That pressure is showing up in retail spending data.

U.S. retail and food services sales for October were unchanged at $732.6 billion on a seasonally adjusted basis. Retail sales alone edged up just 0.1%, signaling a pause after months of uneven gains.

Under the surface, category performance diverged. Department stores posted a 4.9% monthly gain, while furniture and home furnishing stores rose 2.3%. Sporting goods and hobby stores also saw modest growth, and nonstore retailers, which include but are not limited to eCommerce channels, continued to outperform, with sales up 1.8% on the month and 9% year over year.

At the same time, consumers pulled back in big-ticket and discretionary areas. Motor vehicle and parts dealers saw sales decline 1.6% in October, and health and personal care stores also slipped 0.6%. Food services and drinking places declined 0.4% in October, suggesting that even experiential spending is coming under pressure as households reassess budgets.

Labor Market Momentum Continues to Cool

The employment backdrop helps explain the caution.

The November Employment Situation report showed the unemployment rate at 4.6%, up from 4.2% a year earlier and near a multiyear high. The number of unemployed increased to 7.8 million, continuing a gradual upward drift through 2025.

Payroll growth has slowed materially. Nonfarm payrolls increased by just 64,000 jobs in November, with gains concentrated in healthcare, construction and social assistance. Most other major sectors, including retail trade, manufacturing and financial activities, showed little or no change.

Wage growth is also cooling. Average hourly earnings rose 0.1% in November, bringing year-over-year wage growth to 3.5%, down from earlier peaks. The data points to stable employment, but little acceleration in pay that might offset rising living costs for hourly and gig workers.

Taken together, the data suggest a consumer economy that is holding together but increasingly dependent on careful trade-offs.

Retail sales are not collapsing, but flat growth and selective pullbacks indicate that paycheck-to-paycheck households are prioritizing essentials and delaying discretionary purchases. Income instability and softening labor conditions mean that resilience into the holiday season and early 2026 may be tested if job growth slows further or prices reaccelerate.