Consumer spending on clothing and footwear fell 2.7 percent to $399.65 billion in December, the third consecutive monthly decline, according to estimates released Friday by the U.S. Bureau of Economic Analysis (BEA).
Overall personal consumption expenditures (PCE) decreased 0.2 percent, or $27.9 billion, in the month. The PCE price index increased 0.4 percent. Excluding food and energy, the core PCE price index rose 0.3 percent.
The decline in spending was reflective of the 1.6 percent seasonally adjusted decrease in December reported by the National Retail Federation based on data from the U.S. Census Bureau, which said overall December sales were down 0.7 percent from November. According to that data, clothing and clothing accessories stores sales were down 14.9 percent in the month.
Personal income increased 0.6 percent, or $116.6 billion, in December, while disposable personal income (DPI), a key gauge of retail spending, also rose 0.6 percent, or $111.6 billion. Real DPI, adjusted for inflation, increased 0.2 percent last month and Real PCE decreased 0.6 percent, or $79.8 billion. This reflected a decrease of $71.9 billion in spending for goods and a $17.6 billion decrease in spending for services.
BEA said the December estimate for personal income and outlays was impacted by the response to the spread of Covid-19.
“Many provisions of the Coronavirus Aid, Relief and Economic Security (CARES) Act continued to wind down before the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act was enacted on Dec. 27,” BEA said. “Additionally, new restrictions and closures took effect in some areas of the United States.”
The rise in personal income in the month was mainly attributed to increases in government social benefits, compensation and personal dividend income that were partly offset by a decrease in proprietors’ income. Within government social benefits, unemployment insurance increased due to a hike in pandemic unemployment compensation–the supplemental weekly payments to unemployment beneficiaries re-introduced through the CRRSA Act.
Within compensation, the main contributor was an increase in wages and salaries in service-producing industries. Within proprietors’ income, both farm and nonfarm decreased based on declines in Paycheck Protection Program loans to businesses. Farm proprietors’ income was also impacted by a decrease in payments under the Coronavirus Food Assistance Program.
Personal outlays decreased $39.2 billion in December. Personal saving was $2.38 trillion in December and the personal saving rate–personal saving as a percentage of disposable personal income–was 13.7 percent.
