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Clothing and Footwear Spending Dips in September as Caution Creeps In

Real personal consumption expenditures (PCE) for clothing and footwear fell $2.62 billion in September, to $402.94 billion—a 0.6 percent drop from August, according to Bureau of Economic Analysis (BEA) figures released Monday.

Overall real PCE, which includes adjustment for inflation, rose 0.3 percent in September, reflecting an increase of $33.5 billion in spending for goods and a $3.5 billion increase in spending for services, according to BEA. Within goods, motor vehicles and parts was the leading contributor to the increase, with strong contribution from recreational goods and vehicles.

James Bohnaker, associate director at IHS Markit, said, “Low unemployment, rising wages and elevated levels of consumer mood are providing plenty of support for consumer spending. However, equity market turbulence amid rising interest rates is a downside risk that could rattle consumer confidence over the fourth quarter.”

Clothing and accessories stores, along with general merchandisers, posted small sales gains in September compared to the previous month, with weather and politics blamed for the stymied growth, the U.S. Census Bureau’s Monthly Retail Trade report showed earlier this month.

Mickey Chadha, vice president at Moody’s, said at the time, “We expect that the overall improving economic fundamentals, coupled with increased credit availability, lower unemployment and wage growth, will translate into higher consumer spending for the remainder of the year.”

The BEA report showed personal income increased $35.7 billion, or 0.2 percent, in September, while disposable personal income (DPI), an important barometer for retail spending, rose $29.1 billion, or 0.2 percent. Real DPI increased 0.1 percent in September.

The PCE price index increased 0.1 percent in the month, as the core index, which excludes the volatile food and energy sectors, was up 0.2 percent. BEA noted the increase in personal income in September primarily reflected increases in wages and salaries, government social benefits and rental income partially offset by a decrease in proprietors’ income.

Personal outlays increased $57.9 billion in September, while personal saving was $975.7 billion. The personal saving rate—personal saving as a percentage of disposable personal income—was 6.2 percent.

“Positive implications from upward revisions to spending were offset by a weaker monthly profile for income, resulting in no net change in forecast for fourth quarter consumer spending,” Bohnaker said. “We look for real consumer spending to grow at a 2.6 percent annualized rate in the final quarter of 2018.”