Consumer spending on clothing and footwear increased 1.8 percent in August from July to $503.48 billion, continuing a seesaw pattern throughout the year, according to the Personal Income and Outlays report released Friday by the Bureau of Economic Analysis (BEA).
Personal consumption expenditures (PCE) on home furnishings and durable household equipment also followed this pattern, rising 2.1 percent in August to $508.47 billion in a series of up and down monthly gains and losses, according to BEA data.
Overall PCE increased 0.8 percent, or $130.5 billion, for the month. Real PCE, adjusted for inflation, rose 0.4 percent. According to BEA, the increase in PCE in August reflected an increase of $66 billion in spending for goods and a $64.6 billion increase in spending for services.
Within goods, increases in spending for food and beverages, as well as “other” nondurable goods, mainly household supplies and recreational items, were partly offset by a decrease in spending for motor vehicles and parts. Within services, the increases were widespread, led by mainly, personal care and clothing services, housing and utilities, and health care.
The increases follow the monthly retail sales report from the Census Bureau that showed clothing and clothing accessories store sales were up 0.1 percent month-over-month. Furniture and home furnishings store sales rose 3.7 percent month-over-month.
“Retail sales in August overcame unusual twists and turns that have affected shopping behavior both in terms of the timing and composition of sales,” National Retail Federation chief economist Jack Kleinhenz said. “The consumer remains rock solid despite the trifecta of macroeconomic headwinds we’ve seen this year, including tapering off of government stimulus, elevated Covid-19 infections and ongoing supply chain challenges in the form of shortages of labor and goods. Higher sales came even with a disjointed back-to-school season that also affected the timing of sales as many school districts returned to in-person learning but some delayed classes until after Labor Day. These results pave the way for sturdy consumer spending and a strong economy in the fourth quarter.”
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The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index was up 0.3 percent.
Compared to August 2020, the PCE price index increased 4.3 percent, reflecting increases in goods and services. Energy prices increased 24.9 percent and food prices increased 2.8 percent. Excluding food and energy, the PCE price index for August increased 3.6 percent from one year ago.
Personal income ticked up 0.2 percent, or $35.5 billion, BEA reported, while disposable personal income (DPI), a key barometer for retail sales, rose 0.1 percent, or $18.9 billion. Real DPI decreased 0.3 percent.
The increase in personal income in August primarily reflected increases in compensation of employees and government social benefits. Within compensation, the increase primarily reflected an increase in private wages and salaries.
“The estimate for August personal income and outlays reflected the continued economic recovery, reopening of establishments and government response related to the Covid-19 pandemic,” BEA said. “Government social benefits increased in August, reflecting advance Child Tax Credit payments authorized by the American Rescue Plan.”
Personal outlays increased $132.6 billion in August. Personal saving was $1.71 trillion in August and the personal saving rate–personal saving as a percentage of disposable personal income–was 9.4 percent.