The news: US shoppers spent steadily throughout the summer, a welcome sign of resilience as retailers brace for a tougher holiday season.

• Retail sales rose 0.6% MoM in August, outpacing the 0.2% expected. On a YoY basis, sales were up by a healthy 5%.
• Excluding autos and gas, sales from July to August increased by 4.9% YoY, with growth in 11 of the 13 categories tracked by the US Commerce Department.

The conditions: There were a few factors contributing to August’s sales surge.

• Back-to-school spending was strong. Several retailers, including Walmart, Burlington, and Dick’s Sporting Goods, highlighted healthy back-to-school demand as a significant tailwind for their Q2 and Q3 performances. That was evident in the retail sales data: Apparel sales were up 1% MoM and 8.3% YoY, while sporting goods, hobby, musical instrument, and book stores also benefited from a 0.8% MoM (4.7% YoY) bump.
• Wealthy shoppers are spending freely. Higher-income households increased spending by 2.2% YoY in August, compared with just 0.3% for lower-income consumers, per Bank of America’s Consumer Checkpoint. Their role is increasingly important since consumers with incomes in the top 10% now account for 49.2% of total spending, the highest level since 1989, per Moody’s Analytics data shared with The Wall Street Journal.
• Inflation is increasing. The retail sales numbers are not adjusted for inflation, which ticked up to 2.9% in August. That could have affected sales in categories like apparel, electronics, and food and beverage, which are among the most vulnerable to tariff-related price hikes.

Our take: While August’s retail sales report is fueling optimism around holiday spending, the strong topline growth obscures growing cracks—mainly among lower- and middle-income consumers, who are stressed about their financial situations and worried about the softening labor market. Those concerns, along with broader economic uncertainty, are keeping shoppers squarely focused on maximizing value.

Go further: Read our Holiday Shopping 2025 report.