Consumers reduced their spending significantly in May, impacted by decreasing gas sales and uncertainty about the economy's future direction, as reported by the Commerce Department.

Retail sales dropped by 0.9%, surpassing the anticipated 0.6% decrease according to the Dow Jones consensus. This decline, adjusted for seasonality but not inflation, followed a 0.1% loss in April and occurred during a period of unease regarding tariffs and geopolitical tensions. However, sales increased by 3.3% compared to a year ago.

Excluding auto sales, there was a 0.3% decrease, which was also worse than the expected 0.1% gain.

Despite this, sales excluding certain items like auto dealers, building materials suppliers, and gas stations, rose by 0.4%. This figure, known as the control group, is used by the department in GDP calculations.

Consumer spending has been sluggish this year, with a peak in March as individuals prepared for President Donald Trump's tariff announcement in April. Building materials and garden stores experienced a 2.7% decline, while lower energy prices led to a 2% drop in gasoline station sales. Motor vehicle and parts retailers saw a 3.5% decrease, and bars and restaurants had a 0.9% decline.

On a positive note, miscellaneous retailers saw a 2.9% increase, online sales rose by 0.9%, and furniture stores had a 1.2% sales growth.

Following the release of these figures, stock market futures remained negative, and Treasury yields also decreased.

Heather Long, the chief economist at Navy Federal Credit Union, mentioned, "Americans purchased cars in March before the tariffs and avoided car dealerships in May. Families are cautious about higher prices and are more selective about their spending choices. People are looking for bargains and are hesitant to make purchases unless they find a good deal."

Despite improved consumer sentiment in May, the ongoing trade war initiated by President Trump's tariffs had negatively impacted consumer and business confidence. However, with a reduction in some of the tensions during a 90-day negotiation period, sentiment has improved.

In other economic news on Tuesday, import prices remained steady against an expected 0.1% decline, while export prices fell by 0.9%.