June retail sales smashed expectations, rising 0.6% month-over-month after two straight declines, signaling that U.S. consumers remain resilient despite elevated borrowing costs and tariff policy uncertainty.

The latest data from the U.S. Census Bureau showed retail and food services sales climbing to $720.1 billion in June, up 0.6% from May and 3.9% higher than a year ago.

The rebound follows two months of contraction, including a revised -0.9% drop in May, and sharply beating economist forecasts of a modest 0.1% increase.

Spending was broad-based, with the biggest gains in miscellaneous store retailers (up 1.8%), motor vehicles and parts dealers (up 1.2%), and building material and garden equipment stores (up 0.9%).

Food services and grocery stores both rose 0.5%, and online retailers saw a 0.4% bump. Only a few categories lagged, including department stores, which declined 0.8%, and furniture and electronics, both of which fell 0.1%.

Even the retail sales control group—a key input for GDP that excludes food, autos, building materials and gasoline—rose a stronger-than-expected 0.5%, pointing to solid real consumption momentum.

“The death of the consumer has been greatly exaggerated – as a blowout retail sales number shows that consumers are still spending and are keeping the economy growing,” Chris Zaccarelli, chief Investment officer for Northlight Asset Management, said in an email.

Consumer Power Defies Policy Pressure

The surprising strength in spending comes amid growing political pressure on the Federal Reserve.

President Donald Trump has renewed his calls for lower interest rates and even brandished a draft letter to oust Fed Chair Jerome Powell—an unprecedented threat that could shake central bank independence.

Yet, the data suggests the Fed has little reason to rush into action. Consumers are still spending and the economy shows few signs of needing stimulus.

“The consumer came back to life in June after a weak performance in May. Other data like initial jobless claims and Philly Fed also painted the picture of a strong economy,” said David Russell, global head of market strategy at TradeStation.

“While it's good for growth overall, it makes it harder to justify interest rate cuts. It could also help put a floor under the U.S. dollar following a big selloff in the first half,” he added.

Labor Market Holds Firm, Inflation Ticks Up

Initial jobless claims fell by 7,000 last week to 221,000—the lowest since April—underscoring the continued tightness in the labor market.

Meanwhile, inflation continues to trend higher. Headline CPI rose 2.7% in June from a year earlier, marking the second consecutive monthly acceleration and the highest level since February.

Markets widely expect the Fed to hold interest rates steady at 4.25–4.50% at its next meeting. Futures pricing shows a 50% chance of a cut in September and fully prices in one 25-basis-point cut by October. A second move is now expected only in early 2026.

With consumers holding up, inflation firming and jobs still strong, the Fed has room to remain patient. For now, American shoppers are doing more than their part to keep the economy humming—and that may delay any rate relief Trump is pushing for.

Read now:

Trump-Powell Feud Heats Up: Odds Of Fed Chair Ouster Spike