U.S. retail sales were essentially unchanged in April, the Commerce Department reported, undershooting the 0.4% gain economists had expected and marking the weakest month since January. Excluding autos, sales rose just 0.2%. The control group — which feeds directly into GDP and excludes autos, gasoline, building materials, and food services — rose 0.3%.
Motor vehicle and parts dealers led the decline, with sales falling 1.2% as elevated financing costs and the lingering effect of tariff-related sticker price increases weighed on demand. Average new vehicle transaction prices remain near $48,000, and the average monthly payment for a financed new car is now $740 — both records when adjusted for trim mix.
Other categories were mixed. Building materials and garden equipment fell 0.5% on weather-related softness in the Northeast. Furniture sales fell 0.7%, the eighth decline in nine months, as the housing market continues to weigh on big-ticket discretionary spending. Sporting goods, hobby, and book stores fell 0.9%.
On the positive side, food services and drinking places rose 0.7%, the strongest gain in four months and a sign that household spending on experiences remains resilient. Health and personal care rose 0.4%, gas stations rose 0.6% on higher pump prices, and nonstore retailers — the category that captures most e-commerce — rose 0.3%.
The data suggest consumers are becoming more selective. Spending on services, particularly experiences and out-of-home dining, continues to grow, while goods spending — especially big-ticket items requiring financing — is plateauing. This pattern is consistent with what major credit card networks have reported on transaction volumes and what executives at Walmart, Target, and Home Depot have flagged on recent earnings calls.
The savings rate, currently at 3.6%, is below its pre-pandemic average of 7%. Excess pandemic-era savings are largely gone for the bottom three quintiles of households, and consumer credit growth has slowed sharply over the past six months. Credit card delinquency rates have ticked up to 3.2% — still well below the 2010 peak, but the highest level since 2012.
For job seekers, the retail data has two implications. First, hiring in goods-heavy retail categories (department stores, furniture, electronics) is likely to remain weak. Second, services-oriented categories — restaurants, health care, recreation — should continue to add jobs at a healthy clip. The Bureau of Labor Statistics expects food services to add over 200,000 jobs over the next year, more than any other industry.
The bigger question is whether the slowdown in goods spending is a leading indicator of a broader consumer pullback or just a normalization after the post-pandemic spending boom. The next few months of retail data, alongside credit card and bank deposit trends, will be crucial. For now, Fed officials have characterized the consumer as 'in good shape but cautious,' and that is also a fair description of the current job market.