US retail sales rise 1.2% in August, largest monthly gain since March
Consumer spending snaps back sharply after July's stumble, with year-over-year growth hitting 6% and control group sales signaling GDP strength
American consumers apparently decided July’s spending slump was a one-month vacation, not a lifestyle change. Retail and food services sales climbed 1.2% in August, the strongest monthly advance since March, according to data released by the US Census Bureau on September 16.
The bounce follows a 0.6% decline in July, which had been the first monthly drop in nine months.
The numbers behind the rebound
On a year-over-year basis, retail sales grew 6.0% in August. July’s sales had clocked in at $763.6 billion.
The National Retail Federation offered a more measured read, noting that core retail sales, which strip out automobiles, gas stations, and restaurants, rose just 0.1% month-over-month. Year-over-year growth in those core segments landed around 3.3%.
The control group, a subset of retail sales that excludes autos, gas, building materials, and food services and serves as a direct input into GDP calculations, posted a 1.4% monthly increase.
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Health and personal care retailers, along with online and non-store segments, showed relative strength among the categories that posted gains.
Context: why July was weak and August was strong
July’s decline had been attributed to shifts in consumer behavior and the timing of promotional activity. Amazon’s Prime Day and competing sales events from other major retailers have created a seasonal pull-forward effect that can distort month-to-month comparisons. Back-to-school shopping also typically provides a tailwind in August as families stock up on everything from laptops to backpacks.
What this means for markets and the Fed
The 1.4% jump in the control group is particularly relevant to Federal Reserve deliberations. Because this measure feeds directly into GDP estimates, it raises the likelihood that third-quarter growth will come in above expectations.
The 6.0% year-over-year growth rate suggests that nominal spending remains well above pre-pandemic trends, even if some of that growth reflects higher prices rather than higher volumes.
A 0.1% gain in core retail sales suggests that the recovery is uneven across categories. The resilience of online and health-related retail spending points to structural shifts that persist regardless of the monthly economic cycle.