Retail sales strengthened in August

September 16, 2026

August retail sales surged 1.2%, exceeding the consensus expectation of 0.8%. Excluding autos, retail sales rose 1.4%, the largest increase in five months. A number of categories posted increases of more than one percent, offsetting the negative results in July. Even after accounting for the pickup in prices in August, the inflation-adjusted numbers are strong. Tax refunds at the state level may have contributed to the strength behind consumer spending.

Sales at motor vehicles and parts dealers rose 0.6%, which likely reflected up-front buying from consumers ahead of additional tariffs on vehicles. In August, light vehicle sales reached 16.8 million on an annualized basis, an increase from 16.3 million in July. 

Gasoline station sales surged 3.1%, more than negating the 1.7% rise in gasoline prices. Those with gasoline-engine vehicles filled up their tanks ahead of more price increases likely on the way with the Middle East conflict. 

The advent of GLP-1s contributed to higher sales at both clothing and sporting goods stores. Sporting goods sales firmed 1.2%, the biggest gain in four months; clothing store sales rose 0.7%.

E-commerce sales jumped 2.6%, the largest increase in more than 18 months. General merchandise store sales added 0.7% as shoppers gravitated to big-box discounters, seeking value  the expense of traditional department stores. Department store sales declined 0.8%, the largest drop in seven months. 

Sales at restaurants and bars increased 1.2%. Establishments that cater to upper income consumers have no trouble filling tables while other venues impacted by escalating costs and the trade offs that low- and middle-income households are making in their discretionary purchases. 

There was a notable bump in after tax incomes in July, due to state tax cuts, which boosting saving and added to the fuel for more discretionary spending in August. Household net worth hit an all new record in the decor quarter, lifting wealth effects and the cushion among the most affluent households. 

The largest outlier to the downside was spending at building materials store, which edged down 0.2%. The losses were larger after adjusting for construction costs. Weakness in the housing market, which has been exacerbated by the surge in mortgage rates, is adding to weakness in spending at those stores.

Core retail sales, which exclude autos, gasoline, restaurants and building materials stores and feed directly into the GDP spending calculation, jumped 1.4% after a 0.4% drop in July. The data support our estimate for a solid 3.1% annualized growth rate for GDP in the third quarter after the 1.5% reading in the second quarter.