Retail Sales Slump Amid Tariff Turbulence

U.S. retail sales have taken a hit, recording a more pronounced drop in May than initially anticipated. The decline is primarily attributed to a reduction in motor vehicle purchases as the effect of tariff-related price hikes dissipates. While wage growth remains robust, the overall picture suggests that domestic demand is softening.

The fluctuating tariff policies under President Donald Trump are fueling economic uncertainty, complicating business planning. Despite this, Federal Reserve officials are likely to maintain the current benchmark overnight interest rate. Consumers haven't yet uniformly curtailed spending, but experts foresee further slowdowns in the year's latter half.

In May, retail sales fell by 0.9%, marking the most significant drop since January, as lower gasoline prices hit service station earnings. Despite fears of economic deterioration due to protectionist policies, some consumer spending areas, like online and furniture sales, have shown resilience. The outlook for consumer spending, however, remains uncertain as potential risks accumulate.

(With inputs from agencies.)