The US consumer showed some strain in July, but broader trends remain solid. Three- and six-month moving averages for retail sales growth are rising and above inflation. Real personal consumption expenditures (PCE) remain consistently above 2%, weaker than 2024–25 but still positive.

Credit card data from Bank of America supports a solid year-to-date spending picture despite weak July. However, Walmart’s Q2 earnings revealed the weakest same-store sales growth in six years, raising concerns about middle- and lower-income consumers, though Sam’s Club performed better. Retail struggles are not new; Sakonnet Research’s Adam Josephson notes volumes are down, with growth driven only by price, across retailers, packaged goods, and restaurants.

Industry missteps in pricing and product mix, plus declining real wages, contribute to the strain. Household savings have fallen since early 2024, now at 3%—lowest postwar levels except 2005–07 and 2022—aligning with rising delinquency in auto and credit card debt from the New York Fed. The puzzle remains: strong headline spending contrasts with weak consumer-facing company results.

Services spending, especially healthcare, housing/utilities, and financial services, is growing faster than goods, but these are essential, not discretionary, spending areas, suggesting consumers are paying necessities, not splurging.