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Back-to-School Boost and E-commerce Fuels Surprising Retail Rally! U.S. households continue to spend at healthy levels despite worries about lingering inflation and a weakening jobs market.

• In recent quarters, total retail sales have shown robust growth. For example, in Q2 2025, total U.S. retail sales increased by 3.9% year-over-year. This upward trend indicates a healthy consumer spending environment.
• E-commerce sales continue to grow at a faster rate than total retail sales. In Q2 2025, U.S. e-commerce sales saw a 5.3% year-over-year increase, outpacing the growth of the overall retail market.
• August retail sales grew 0.6% from last month after posting upwardly revised growth of 0.6% in July and building expectations that Q3 economic growth will be stronger than expected.
• Consumer spending at restaurants suggests that the consumer is on stable footing, minimizing recession risk. Historically, risk assets perform well when the Fed starts cutting rates in non-recessionary environments.
• Car buyers 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.

Big picture: What's enabling Americans to 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.