Following two consecutive months of declines, real personal consumption expenditures (PCE) for clothing and footwear increased 0.7 percent to $405.77 billion in October compared to the previous month, according to estimates released Thursday by the Bureau of Economic Analysis (BEA).
Overall real PCE, adjusted for inflation, rose 0.4 percent or $56.55 billion, in the month, as personal income increased 0.5 percent, or $84.9 billion. Non-adjusted PCE increased 0.6 percent, or $86.9 billion, in October.
Moody’s Investors Service said in a new report this week that consumer spending in the U.S. is expected to remain strong during the holiday season, thanks to positive employment conditions and a recent acceleration in wage growth.
However, as interest rates rise and other costs increase, Moody’s expects consumption to grow at a slower pace in 2019. If there is a reversal in the recent strong business profit growth that curtails job creation and wage increases, or a sharp financial market correction dampens sentiment, the consumption outlook would weaken, Moody’s said.
Disposable personal income (DPI), a key barometer for retail sales, climbed 0.5 percent, or $81.7 billion. Clothing and accessories store sales were up 0.5 percent seasonally adjusted in October to $23.1 billion, compared to September, according to the National Retail Federation. Department store sales advanced 1.3 percent over September to $12.5 billion.
BEA said the increase in personal income in October primarily reflected gains in wages and salaries, proprietors’ income, and government social benefits to persons.
Farm proprietors’ income increased $11.6 billion in October, which included subsidy payments associated with the Department of Agriculture’s Market Facilitation Program, which includes cotton growers.
The PCE price index increased 0.2 percent, while the core, PCE price index, excluding the volatile food and energy sectors, rose 0.1 percent, BEA reported.
Personal outlays increased $90.8 billion in October. Personal saving was $967.8 billion in October and the personal saving rate–personal saving as a percentage of disposable personal income–was 6.2 percent.