Retail Sales Return to Growth in June as Inflationary Expectations Ease

Retail sales returned to growth and consumer sentiment improved in June as stocks continued their sharp rebound from April lows, resulting in a powerful wealth effect. Equity markets are responding to reduced macroeconomic uncertainty, spurred by indications that the Trump Administration is willing to negotiate trade deals. With many of the steepest tariffs on hold and the impact of existing ones still working their way through the economy, the potential for a more pronounced inflationary uptick remains elevated. That said, recently upbeat capital markets and easing inflationary expectations from business owners point to growing confidence that inflation will remain moderate and economic conditions will stay constructive. In this month’s edition of KBRA’s commentary on retail sales, we discuss these developments in the context of the solid but cooling labor market.

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