As stay-at-home orders were lifted around the country and retailers started to reopen at least in a limited capacity, consumer spending on clothing and footwear bounced back in May after bottoming out in April as the coronavirus pandemic peaked.
Clothing and footwear personal consumption expenditures (PCE) increased 43.5 percent last month compared to April to reach $318.83 billion, according to a report released Friday from the U.S. Bureau of Economic Analysis (BEA). However, spending in the category was still 22.57 percent below May 2019’s $411.78 billion.
This is a similar result from May’s retail sales data from the National Retail Federation (NRF) and the U.S. Census Bureau, which showed clothing and clothing accessories stores were up 188 percent month-over-month seasonally adjusted, but down 63.3 percent unadjusted year-over-year.
“The economy kicked off in May as retailers and other businesses reopened and both stimulus money and supplemental unemployment checks fueled spending driven by pent-up demand from two months of shutdowns,” NRF chief economist Jack Kleinhenz said.
“But full recovery is still a long way off,” he added. “Comparisons against April have to be taken in context because April was a full month when almost everything that wasn’t deemed ‘essential’ was shut down. Spending has improved considerably, but it’s still far below where it was a year ago, and while the freefall in consumer confidence is over, unemployment remains high and confidence is still at recession levels.”
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BEA reported that overall PCE rose 8.2 percent, or $994.5 billion, in the month, while real PCE, adjusted for inflation, increased 8.1 percent, or $892.6 billion. This increase reflected a gain of $590.4 billion in spending for goods and a $363.8 billion increase in spending for services.
Within goods, spending on motor vehicles and parts, as well as recreational goods and vehicles, were the leading contributors to the increase. Within services, the largest contributors were spending for health care, as well as food services and accommodations.
The PCE price index increased 0.1 percent, while the core index, excluding food and energy, also rose 0.1 percent.
Personal income decreased 4.2 percent, or $874.2 billion, in May, according to BEA estimates. Disposable personal income (DPI), a key barometer for retail spending, fell 4.9 percent, or $911.1 billion, as real DPI decreased 5 percent in May.
The May estimate for personal income and outlays was impacted by the response to the spread of COVID-19, BEA stated. Federal economic recovery payments continued, but were at a lower level than in April, and government stay-at-home orders were partially lifted in May.
The decrease in personal income in May primarily reflected a decrease in government social benefits to the public.
Partially offsetting the decrease in other government social benefits was an increase in unemployment insurance benefits, based primarily on unemployment claims data from the Department of Labor’s Employment and Training Administration.
Personal outlays increased $989.9 billion in May. Personal saving was $4.12 trillion in May and the personal saving rate–personal saving as a percentage of disposable personal income–was 23.2 percent.