With extremely high unemployment and retail shutdowns across the country brought on by the COVID-19 crisis, consumer spending on clothing and footwear plummeted 30 percent in April to $213.44 billion, the Bureau of Economic Analysis (BEA) reported Friday.
The findings mark the second straight month of dramatic declines in personal consumption expenditures (PCE) for the category, with March’s numbers coming in at $304.91 billion, a drop of 27.6 percent from February’s $421.38 billion in apparel and footwear spending, BEA found. Compared to April 2019, PCE last month was off a staggering 49.6 percent from $423.56 billion.
The results concur with even more dramatic data released earlier this month from the U.S. Census Bureau and analyzed by the National Retail Federation (NRF) that showed sales at clothing and accessory stores were down a seasonally adjusted 78.8 percent month-over-month and an unadjusted 89.3 percent year-over-year.
The Census Bureau reported overall retail sales during April were down 16.4 percent from March and 21.6 percent below a year earlier. That followed a record-setting 8.3 percent month-over-month drop in March.
“As predicted, retail sales were bad in April and lower than in March,” NRF chief economist Jack Kleinhenz said when the report was issued on May 15. “This should come as no surprise since April was the first full month when most businesses not considered essential were closed, both in retail and across the economy…Now that we’re in mid-May, many businesses are already starting to reopen. Relief payments and pent-up demand should provide some degree of post-shutdown rebound, but spending will be far from normal and may be choppy going forward.”
BEA’s report revealed that overall PCE decreased 13.6 percent, or $1.89 trillion, in the month. Real PCE, adjusted for inflation, decreased 13.2 percent in April.
The overall $1.66 trillion decrease in real PCE in April reflected a $758.3 billion decline in spending for goods and a $943.3 billion decrease in spending for services, BEA said. Within goods, decreases in all subcomponents were led by a drop in food and beverages. Within services, the largest contributors to the decline were spending for health care, as well as food services and accommodations.
Personal income increased 10.5 percent, or $1.97 trillion, in the month, while disposable personal income (DPI), a barometer of retail spending, increased 12.9 percent, or $2.13 trillion. Real DPI, adjusted for inflation, increased 13.4 percent in April.
BEA said the rise in personal income in April primarily reflected an increase in government social benefits like the stimulus checks many consumers received.
The PCE price index was down 0.5 percent, while the core index, excluding food and energy, declined 0.4 percent.
BEA said the April estimate for personal income and outlays was impacted by the response to the spread of COVID-19, as federal economic recovery payments were distributed, and governments continued with “stay-at-home” orders. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate for April because the impacts are generally embedded in source data and cannot be separately identified, the agency noted.
Personal outlays decreased $1.91 trillion in April. Personal saving was $6.15 trillion in the month and the personal saving rate–personal saving as a percentage of disposable personal income–was 33 percent.