WASHINGTON (AP) — Consumers picked up their spending in June after an earlier pullback, despite anxiety over tariffs and the state of the U.S. economy.
Retail sales rose a better-than-expected 0.6% in June, the Commerce Department said Thursday, after two consecutive months of spending declines, a 0.1% pullback in April and a 0.9% slowdown in May.
Retail was buoyed earlier in the year by car sales as Americans attempted to get ahead of President Donald Trump’s 25% duty on imported cars and car parts.
The erratic consumer spending is taking place during a period of mixed signals about the economy as well. The U.S. economy shrank at a 0.5% annual pace from January through March, but the U.S. job market is proving to be very resilient, and major tariffs keep getting postponed.
Healthy spending continues, with a heavy focus on necessities, rather than electronics or new appliances.
Yet consumers haven't completely cut out spending on nonessential goods. Sales at restaurants, the lone services component within the Census Bureau report and a barometer of discretionary spending, rose moderately.
“Consumers are only feeling a modest amount of pressure from tariffs, and any weakness here is not having much of an effect in forcing them to pull back on more discretionary areas of spending such as restaurants and bars,” wrote William Blair’s macro analyst Richard de Chazal.
Yet Chazal fears that the administration may be picking up false assurances from strong consumer spending. Consumer sentiment and markets have tumbled after aggressive tariff announcements, and many economist expect rising prices will have a greater impact on consumers before the year is over.
Retail sales in June included a 1.2% gain in sales of autos and auto parts. Spending expanded across most major categories including clothing and personal care. Excluding autos and automotive parts, sales rose 0.5%, according to the Commerce Department
Clothing and accessories sales rose 0.9%, while health and personal care sales saw a 0.5% bump. Online retailers recorded a 0.4% gain.
Electronics and appliance retailers, furniture stores and department stores all saw sales declines. The products sold in these sectors are heavily imported.
A category of sales that excludes volatile sectors such as gas, cars, and restaurants rose last month by 0.5% from the previous month. The figure feeds into the Bureau of Economic Analysis’s consumption estimate and is sign that consumers are still spending on some discretionary items.
Heather Long, the chief economist at Navy Federal Credit Union, noted that layoffs remain low and consumers are still confident enough that the economy is chugging along.
“Don’t count the American consumer out yet," said Long in a statement. "There’s still a lot of trepidation about tariffs and likely price hikes, but consumers are willing to buy if they feel they can get a good deal. The word of the summer for the economy is resilient.”
The retail sales report arrives amid a whipsaw frenzy of on and off again tariffs have that jolted businesses and households. Business owners say it's become very difficult to manage supplies and inventories. Americans, when they do shop, are generally steering clear of the things they don't absolutely need.
The latest government report showed that inflation rose last month to its highest level since February as Trump’s sweeping tariffs push up the costs of everything from groceries and clothes to furniture and appliances.
Consumer prices rose 2.7% in June from a year earlier, the Labor Department said Tuesday, up from an annual increase of 2.4% in May. On a monthly basis, prices climbed 0.3% from May to June, after rising just 0.1% the previous month.
Trump insists that the U.S. effectively has no inflation as he has attempted to pressure Federal Reserve Chair Jerome Powell into reducing short-term interest rates.
Yet the new inflation data makes it increasingly likely that the central bank will leave rates where they are for at least a bit longer. Powell has said that he wants to measure the economic impact of Trump’s tariffs on prices before reducing borrowing costs.
A notable litmus test about the state of the consumer was Amazon’s four-day Prime event along with competing retail sales from the likes of Walmart and Target that kicked off last week. Adobe Digital Insights, which tracks online sales, reported that the sales events drove $24.1 billion in online spending, a 30.3% increase compared with the same period last year.
And again, those who were spending prioritized essentials like dish soap and paper products over big-ticket purchases, according to consumer data provider Numerator, based on its analysis of Amazon Prime orders.
Deborah Weinswig, founder and CEO of Coresight Research, said she’s becoming more optimistic about the financial health of the consumer after the big retail events. She said inventories are at a healthy level, and she didn’t see big fire sales.
”People aren’t buying things that they don’t need,” she said. “I think it’s a healthier retail environment.”
Retailers are now turning their attention to the back-to-school shopping season, which is the second largest consumer rush after the winter holidays. Coresight Research estimates that total U.S. back-to-school spending will increase by 3.3% year compared with the year-ago period, to $33.3 billion. And it predicts that shoppers will do a big chunk of their shopping before August to get ahead of tariffs.
Economists will also dissect quarterly financial reports next month from major retailers like Walmart, Target and Macy’s, both for consumer behavior and to gauge how businesses are navigating a chaotic period of global trade due to fluid U.S. policies.
Levi Strauss & Co. said last week that it was cutting back on making styles that aren’t selling and making targeted price increases as it moves production away from China due to tariffs.
FILE - Shoppers leave Macy's in Boston, Nov. 29, 2019. (AP Photo/Michael Dwyer, file)
Tomatoes are displayed as customers shop at a grocery store in Glenview, Ill., Tuesday, July 15, 2025. (AP Photo/Nam Y. Huh)
MELBOURNE, Australia (AP) — Auckland was the first major city to ring in 2026 with a fireworks display launched from New Zealand’s tallest structure, Sky Tower, followed by a defiant celebration in Australia in the aftermath of its worst mass shooting.
South Pacific countries were the first to bid farewell to 2025. Clocks stuck midnight in Auckland 18 hours before the famous ball drop in New York’s Times Square. The five-minute display involved 3,500 fireworks.
Australia’s east coast welcomed 2026 two hours after New Zealand. In Sydney, the country's largest city, celebrations were held under the pall of Australia’s worst mass shooting in almost 30 years. Two gunmen targeted a Hannukah celebration at Bondi Beach on Dec. 14, killing 15 and wounding 40.
A heavy police presence monitored the thousands who thronged to the waterfront to watch a fireworks show centered on the Sydney Harbor Bridge. Many officers openly carried rapid-fire rifles, a first for the annual event.
An hour before midnight, the massacre victims were commemorated with a minute of silence while images of a menorah were projected on the bridge pylons. The crowd was invited to show solidarity with Australia’s Jewish community.
New South Wales Premier Chris Minns urged Sydney residents not to stay away through fear, saying extremists would interpret smaller crowds at New Year’s Eve festivities as a victory.
“We have to show defiance in the face of this terrible crime and say that we’re not going to be cowered by this kind of terrorism,” he said.
In Indonesia, one of Australia’s nearest neighbors, cities scaled back festivities as a gesture of solidarity with communities devastated by floods and landslides that struck parts of Sumatra island a month ago, claiming more than 1,100 lives.
The capital, Jakarta, was not ringing in 2026 with its usual fanfare, choosing subdued celebrations with a program centered on prayers for victims, city Gov. Pramono Anung said last week.
Makassar Mayor Munafri Arifuddin urged residents of one of Indonesia’s largest cities to forgo parties, calling for prayer and reflection. "Empathy and restraint are more meaningful than fireworks and crowds,” he said.
Concerts and fireworks on Indonesia’s tourist island of Bali were canceled and replaced with a cultural arts event featuring traditional dances.
Hong Kong, too, was ringing in 2026 without the usual spectacle in the sky over iconic Victoria Harbor, after a massive fire in November killed at least 161 people.
The facades of eight landmarks were turning into giant countdown clocks presenting a three-minute light show at midnight.
Many parts of Asia welcome the new year by observing age-old traditions.
In Japan, crowds were gathering at a Buddhist temple in Tokyo for a bell striking at midnight. In the South Korean capital, Seoul, a bell tolling and countdown ceremony were being held at the Bosingak Pavilion.
Tourists and Berliners alike marked the end of 2025 by enjoying snowfall, taking selfies and making snowmen in front of the German capital's cathedral and the iconic Brandenburg Gate. The Berlin TV Tower was nearly invisible thanks to the falling flakes and fog.
Greece and Cyprus were ringing in 2026 by turning down the volume, replacing traditional fireworks with low-noise pyrotechnics, light shows and drone displays in capital cities. Low-noise fireworks avoid the explosive bursts that generate the loud cracks of traditional displays.
Officials in the countries said the change is intended to make celebrations more welcoming for children and pets, particularly animals sensitive to loud noise.
Police in New York City will have additional anti-terrorism measures at the Times Square ball drop, with “mobile screening teams” in search of suspicious activity. It is not in response to a specific threat, according to NYPD Commissioner Jessica Tisch.
Zohran Mamdani will take office as mayor at the start of 2026. Two swearing-in ceremonies are planned, starting with a private ceremonial event around midnight in an old subway station.
Saaliq reported from New Delhi, India. Associated Press writers around the world contributed to this report.
The police stand guard during the 2026 Taipei New Year's Party celebration in front of the Taipei City Government Building in Taipei, Taiwan, Wednesday, Dec. 31, 2025. (AP Photo/Chiang Ying-ying)
People gather to celebrate the New Year at the Zojoji Buddhist temple, on Wednesday, Dec. 31, 2025 in Tokyo. (AP Photo/Eugene Hoshiko)
A Buddhist prays in front of lanterns on New Year's Eve at the Jogye temple in Seoul, South Korea, Wednesday, Dec. 31, 2025. (AP Photo/Lee Jin-man)
Fireworks burst over the Sydney Harbour Bridge during the New Year celebrations in Sydney, Thursday, Jan. 1, 2026. (AP Photo/Rick Rycroft)
Swimmers enter the water during the traditional Sylvester swim at lake Moossee in Moosseedorf, Switzerland, Wednesday, Dec. 31, 2025. (Anthony Anex/Keystone via AP)
A child poses for a photo with a prosperity decoration to welcome 2026 Year of the Horse, following the Chinese zodiac at a shopping district on new year's eve, in Beijing, Wednesday, Dec. 31, 2025. (AP Photo/Andy Wong)
A person walks by illuminated decorations on New Year's Eve in Seoul, South Korea, Wednesday, Dec. 31, 2025. (AP Photo/Lee Jin-man)
Fireworks burst over the Sydney Harbour Bridge as New Year's celebrations begin in Sydney, Wednesday, Dec. 31, 2025. (AP Photo/Rick Rycroft)
Fireworks burst over the Sydney Harbour Bridge as New Year's celebrations begin in Sydney, Wednesday, Dec. 31, 2025. (AP Photo/Rick Rycroft)
Ryan Seacrest and Rita Ora, hosts of "Dick Clark's New Year's Rockin' Eve with Ryan Seacrest 2026," in New York at the New Year's Eve Times Square Ball on Tuesday, Dec. 30, 2025. (AP Photo/Ted Shaffrey)
A vendor sells New Year's eve party goods at a market in downtown Lima, Peru, Tuesday, Dec. 30, 2025. (AP Photo/Guadalupe Pardo)
A families pose for a photo with a prosperity decoration to welcome 2026 Year of the Horse, following the Chinese zodiac as people visit a shopping district on new year's eve, in Beijing, Wednesday, Dec. 31, 2025. (AP Photo/Andy Wong)
A child poses for a photo with a prosperity decoration to welcome 2026 Year of the Horse, following the Chinese zodiac at a shopping district on new year's eve, in Beijing, Wednesday, Dec. 31, 2025. (AP Photo/Andy Wong)
