MW Retail sales are strong for the third month in a row. Economy still seems to be in pretty good shape.

By Jeffry Bartash

'Consumer spending is booming' and 'the U.S. economy is continuing to expand'

Americans haven't cut back on spending much despite trade wars and a slower economy.

Don't bet against the American consumer, a Wall Street saying goes. The latest increase in retail spending may prove the point.

Retail sales rose strongly in August for the third month in a row, a sign that households are spending at healthy levels despite worries about lingering inflation and a weakening job market.

Receipts at retail cash registers increased 0.6% last month, the government said Tuesday, and outlays in July were revised higher. That was twice as big an increase as Wall Street expected.

Car buying was a big contributor, but Americans also spent a lot of money at online stores and ate out more often.

Retail sales represent a large slice of consumer spending, the main pillar of growth for the U.S. economy.

Spending has been up and down this year as shoppers time their purchases to beat tariffs, but the overall trend has been strong enough to keep the economy expanding.

Rising inflation is playing a part, too. Americans have also had to spend more on certain items that are heavily imported, such as coffee and car parts, whose prices have risen.

Key details: Sales of new cars and parts increased in August for the third month in a row. Car shoppers have been buying more vehicles than usual for the past several months to avoid anticipated price increases in the coming months as tariffs take full effect.

Automobile sales account for one-fifth of all retail sales and have an outsize effect.

Sales omitting autos and gasoline, a better way to measure trends in retail spending, rose an even stronger 0.7%.

Sales at internet retailers jumped 2% last month after a solid gain in July tied to Amazon (AMZN) Prime Day.

Perhaps the most critical category in the retail report, restaurant sales, advanced 0.7% last month. People buy more prepared food when they are confident in the economy. They eat out less when they are anxious about their jobs.

Overall restaurant spending is up 6.6% in the past three months compared with the same three-month period one year ago.

Big picture: What has let Americans spend at healthy levels is relatively high job security and a low level of unemployment, but the labor market has developed widening cracks that threaten to hurt the economy.

The Federal Reserve is expected to cut interest rates this week and in the months ahead to provide a spark, but it's unclear how much lower rates will spur more hiring.

Businesses have been reluctant to pay more for labor until the trade wars die down and they know how much tariffs are going to cost them.

Looking ahead: "[C]onsumer spending is booming and regardless of the negative jobs revisions, the U.S. economy is continuing to expand," said Chris Zaccarelli, chief investment officer at Northlight Asset Management in Charlotte, N.C.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to open mixed in Tuesday trading. Stocks are trading at all-time highs.

-Jeffry Bartash

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September 16, 2025 09:34 ET (13:34 GMT)

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