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October Data Shows a Resilient Consumer

In a sign that inflation isn’t completely dampening spending, personal consumption expenditures (PCE) on clothing and footwear increased a seasonally adjusted 0.3 percent in October compared to the previous month to $505.21 billion, according to estimates released today by the Bureau of Economic Analysis (BEA).

It was the fourth straight month of spending increases for the category, which was joined on the list of gainers by the home foods category and durable household equipment with a 1.2 percent gain to $527.84 billion.

Data released earlier this month by the National Retail Federation (NRF) and the U.S. Census Bureau showed sales at clothing and clothing accessories stores were flat month over month seasonally adjusted, but up an unadjusted 2.5 percent compared to October 2021.

That data set also showed sales at furniture and home furnishings stores were up 1.1 percent month over month, but down 0.6 percent year over year.

“October’s performance is a strong foothold as we go into the holiday season,” NRF chief economist Jack Kleinhenz said when the numbers were released. “Consumers continue to show resiliency despite elevated inflation, rising borrowing costs and widespread macroeconomic uncertainties. With employment and wages growing and shoppers accessing accumulated savings, we expect the trend to continue. Early holiday deals that enticed customers appear to underlie the October numbers and more promotions will be seen in November and December, which are historically the big holiday shopping months.”

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BEA reported that overall PCE increased 0.8 percent, or $147.9 billion, reflecting an increase of $85.9 billion in spending for goods and an increase of $61.9 billion in spending for services, BEA said.

Within goods, new motor vehicles, led by light trucks, and gasoline and other energy goods were the leading contributors to the increase. Within services, the largest contributor to the spending rise was in food services and accommodations. This increase was partly offset by a decrease in financial services and insurance.

Real PCE, adjusted for inflation, was up increased 0.5 percent. The rise reflected increases of 1.1 percent in spending on goods and 0.2 percent in spending on services, BEA noted. Within goods, spending on new motor vehicles, mainly light trucks, was the leading contributor. Within services, the largest contributors to the increase were spending on health care, food services and accommodations, as well as housing and utilities. These increases were partly offset by a decrease in financial services and insurance.

From the preceding month, the PCE price index increased 0.3 percent, with increases of $85.9 billion in spending for goods and $61.9 billion in spending for services. Prices for goods increased 0.3 percent, attributable to an increase in prices for nondurable goods, led by gasoline and other energy goods, that was partly offset by widespread decreases in prices for durable goods, according to BEA.

Prices for services rose 0.4 percent, led by food services and accommodations, and housing services. The core PCE price index, excluding food and energy, was up 0.2 percent.

Disposable personal income (DPI), considered an arbiter of retail spending, increased 0.7 percent, or $132.9 billion. Real DPI increased 0.4 percent in October.

Personal income rose 0.7 percent, or $155.3 billion, in October. The increase primarily reflected increases in compensation and government social benefits, BEA noted. The increase in compensation was led by private wages and salaries, with services-producing industries and goods-producing industries both increasing.