Retail Sales Jump 1.2% in August, Beating Forecasts After a July Pullback

American shoppers spent more than expected in August. The Commerce Department reported Wednesday that retail sales rose 1.2% for the month, well ahead of the 0.7% gain economists had forecast, and a sharp turnaround from a revised 0.5% dip in July.

Total retail and food services sales hit $773.9 billion in August — up 1.2% from July and up 6.0% from the same month a year earlier, according to the Census Bureau's advance estimate.

The rebound came just one month after spending pulled back, and it lands at a delicate moment for the economy: the Federal Reserve raised interest rates the same week for the first time since 2023, citing inflation that hadn't meaningfully cooled. Stronger-than-expected consumer spending complicates that picture — it's a sign of a resilient economy, but also more fuel for the demand-driven price pressure the Fed is trying to contain.

Retail sales are one of the most closely watched monthly indicators because consumer spending drives roughly two-thirds of U.S. economic activity. A number this far above forecast tends to move how economists read the health of the broader economy heading into the fall — and, this month, it lands directly alongside a Fed that just signaled it isn't done raising rates.