Indicative of early holiday shopping and the impact of the Omicron surge, consumer spending on clothing and footwear fell a seasonally adjusted 6.2 percent to $476.48 billion in December, the second consecutive monthly decline after three months of increases, the Bureau of Economic Analysis (BEA) revealed Friday in its “Personal Income & Outlays” report.
Following a similar tract, spending on furnishings and durable household equipment also declined for the second straight month, falling 6.2 percent to $472.6 billion.
“The estimate for December personal income and outlays reflected the continued economic recovery and government response to the Covid-19 pandemic,” BEA said. “In December, Covid-19 cases resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country. Government social benefits decreased, primarily reflecting the winding down of pandemic-related assistance programs.”
Overall personal consumption expenditures (PCE) decreased 0.6 percent, or $95.2 billion, in December. Real PCE, adjusted for inflation, was down 1 percent, with goods decreasing 3.1 percent, or $147.2 billion, and services increasing 0.1 percent, or $52 billion.
Within goods, decreases were widespread across most components and were led by recreational goods and vehicles and nondurable goods such as newspapers, household supplies, and games and toys, as well as furnishings and durable household equipment. Within services, the largest contributor to the increase was spending for health care.
The decline in spending was comparable to this month’s retail sales report from U.S. Census Bureau that saw a seasonally adjusted falloff of 1.9 percent from November to $626.8 billion, marking the first drop since July and largest dip since February. Apparel and accessories sales decreased 3 percent for the month, while sales at department stores fell 7 percent. Online retailers saw sales fall 9 percent, while furniture and home furnishing sales were down 5.5 percent.
The PCE price index increased 0.4 percent, while the core index, excluding food and energy, rose 0.5 percent. The PCE price index for December increased 5.8 percent from one year ago, reflecting increases in goods and services. Energy prices jumped 29.9 percent, while food prices increased 5.7 percent. Excluding food and energy, the core price index for December increased 4.9 percent from one year ago.
Personal income increased 0.3 percent, or $70.7 billion, in December, as disposable personal income (DPI), a key barometer for retail spending, rose 0.2 percent, or $39.9 billion. Real DPI decreased 0.2 percent in December.
BEA said the increase in personal income primarily reflected an increase in compensation that was partly offset by a decrease in proprietors’ income. Within compensation, the increase reflected increases in private and government wages and salaries. Government social benefits decreased slightly, reflecting the winding down of pandemic-related assistance programs.
Personal outlays decreased $93.5 billion in December. Personal saving was $1.44 trillion in December and the personal saving rate–personal saving as a percentage of disposable personal income–was 7.9 percent.