The news: US retail sales rose 0.6% MoM in June, per the Commerce Department, well ahead of the projected 0.1% increase. On a YoY basis, sales were up a healthy 3.9%, a sign of consumers’ resilience in the face of considerable uncertainty.

Behind the numbers: The data indicates a considerable rebound in spending following May’s steep drop, even accounting for an uptick in inflation in June. That could reflect consumers’ growing optimism about the direction of the economy, despite the threat of new tariffs and geopolitical uncertainty.

• Consumer sentiment increased for the first time in six months in June, according to the University of Michigan’s tracker, due to easing fears around personal finances and business conditions.
• That recovery in confidence was supported by a 0.6% MoM increase in restaurant sales, the sole services category in the retail sales report, a sign that households feel confident enough to splurge on dining out.

But even if consumers are generally feeling less pessimistic, tariffs continue to inform their purchasing decisions.

• That could explain the 1.2% MoM spike in motor vehicle sales, as shoppers try to get ahead of future price increases.
• Earlier back-to-school sales may also have contributed to the overall uptick in spending.

Our take: June’s upbeat sales report underscores the volatility of the current retail landscape. While consumers may currently feel secure enough to manage rising prices, that could quickly change as tariff-related cost increases begin to hit more directly.

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