U.S. July Retail Sales Fall 0.6%, One-Off Drivers Cited

U.S. July retail sales fell 0.6%, the biggest drop in over a year and comes after a strong first half of 2026. Excluding autos and gasoline, sales fell 0.2%, with motor vehicles, electronics, and nonstore retailers among the weakest, the latter pressured by Prime Day timing. Analysts say part of July weakness reflects one-off factors like Amazon Prime Day and World Cup-related boosts in June, but underlying demand remains soft as inflation stays elevated. Consumers pulled back as high prices and tighter finances restrain discretionary purchases, potentially weighing on third-quarter growth. Some economists see a temporary payback from earlier gains, while others warn the slowdown could persist if inflation remains stubborn and confidence stays muted. Market response has cooled expectations for near-term Fed rate increases, with rate-hike odds slipping after the data release.