Gas station revenue plummeted, "masking" real consumption power: US June retail "cold outside and hot inside", core consumer spending increased by 0.5% month-on-month, exceeding expectations.

In June, retail sales in the United States increased slightly, as falling gasoline prices dragged down gas station revenue sharply, but released space in household budgets, driving consumption in multiple sectors such as e-commerce and automobiles. Data released by the U.S. Census Bureau of the Department of Commerce on Thursday showed that retail sales in June increased by 0.2% month-on-month, in line with market expectations. The May data was revised from an initial increase of 0.9% to an increase of 1.0%. These non-inflation-adjusted retail sales data mainly reflect commodity spending. Although the overall increase was moderate, the "breathing space effect" brought about by the decrease in gasoline prices allowed consumers to have more disposable income to turn to other commodities, masking the stronger potential consumption momentum. "Declining gasoline prices mean that the June retail sales data actually underestimated the true strength of demand," economist Elisa Wang pointed out in a report. "Underneath the surface of seemingly soft data, temporary factors actually played a role in boosting sales." Among the 13 retail categories, sales in 7 categories increased. Gas station sales revenue in the month fell sharply by 5.3%, the largest monthly drop since 2022. According to data from the U.S. Energy Corp., the average gasoline price in the United States in June decreased from $4.61 per gallon to $4.18, a decrease of about 50 cents. Behind this was the easing of tensions between the United States and Iran at the time, which led to a drop in oil prices. Excluding gas station sales, overall retail spending in the previous month actually increased by 0.7%. Core demand is stable and strong, with bright performance in multiple categories Excluding volatile items such as automobiles, gasoline, building materials, and food services, the control group retail salesclosest to goods consumption expenditure in GDPincreased by 0.5% in June, lower than the upwardly revised 0.8% in May, but higher than the market's expected 0.4%, confirming that the consumer base remained strong. Looking at sub-items, non-store retailers (e-commerce) saw a significant increase of 1.9% month-on-month, the largest increase in nearly a year, largely driven by promotions such as Amazon.com Inc.'s Prime Day at the end of the month and competitive promotions from other retailers. Sales at car and parts dealers also grew by 1.9%, the largest increase since July 2025, while discretionary spending categories such as sporting goods, musical instruments and books, electronics, and appliances were also generally strong. However, the FIFA World Cup, which attracted tourists from around the world, did not significantly boost dine-in consumption, with sales at restaurants and bars increasing by only 0.1%. Department stores also saw a slight increase of 0.1%. Sales at health and personal care stores declined by 0.8%. The "K-shaped" divergence is intensifying, and the window of low oil prices may not be sustainable While the drop in gasoline prices in June freed up some spending space for households, the structural differentiation in consumer behavior is deepening. A report from Bank of America Corp.'s research department noted that since the beginning of this year, expenditures at discount clothing and value grocery stores have risen again, with "price-sensitive consumers increasingly turning to general merchandise stores for savings." From the beginning of the year to now, spending at discount clothing stores for low-income families has grown five times faster than for high-income families. The Beige Book released by the Federal Reserve this week also confirmed this trend: consumer spending in early July showed a slight increase, but "several districts reported declines in discretionary spending, or consumers turning to more affordable alternatives." This "K-shaped" recovery is further highlighted under the Matthew effect: high-income families continue to benefit from the wealth effect of rising stock prices, while low-income groups are more affected by import tariffs and high prices caused by conflicts such as GEO Group Inc. There is also a difference in perception of end demand among businesses. Both the CFO of JPMorgan Chase (JPM.US) and the CEO of Wells Fargo & Company (WFC.US) emphasized on recent earnings conference calls that consumers and businesses remain robust, with a strong labor market and higher tax refunds supporting spending. However, the CEO of PepsiCo Inc. (PEP.US) bluntly stated that "consumer performance is worse than expected, mainly due to gasoline prices," and the COO of General Mills, Inc. (GIS.US) warned that consumers are becoming more cautious, relying more on promotions and reducing daily price purchases. Additionally, it is worth noting that the brief window of low oil prices may be quickly closing. Earlier this month, the shaky ceasefire between the United States and Iran collapsed, reigniting hostilities in the Middle East, threatening shipping in the Strait of Hormuz, and international oil prices and terminal gasoline prices have resumed their upward trend. If energy costs continue to rise, the budget pressure on households in the late summer may intensify, with the breathing space previously provided by promotions, tax refunds, and low oil prices disappearing, further strengthening the structural rifts in the consumption sector. The GDPNow model of the Atlanta Fed currently predicts that the annualized GDP growth rate for the second quarter is only 1.3%, lower than the 2.1% in the first quarter, implying that overall economic expansion momentum is weakening.