Skip to main content

Consumers Pull Back, But We’re ‘Not In a Recession’

After rising for four straight months, consumer spending on clothing and footwear fell a seasonally adjusted 4.2 percent in November to $500.74 billion, according to new estimates released from the U.S. Bureau of Economic Analysis (BEA).

Similarly, home goods shoppers spent $503.87 billion last month on furnishings and durable household equipment, a 3.9 percent decline from October, BEA reported.

The drop comes on the heels of this month’s report on retail sales from the Census Bureau and National Retail Federation (NRF) that showed clothing and clothing accessory store sales were down a seasonally adjusted 0.2 percent month over month in November, but up an unadjusted 1.7 percent year over year.

Furniture and home furnishings store sales were down 2.6 percent from October and declined 3.3 percent from November 2021.

“While job and wage gains and built-up pandemic-era savings supported holiday shoppers in November, shoppers were squeezed by inflation and higher interest rates,” NRF chief economist Jack Kleinhenz said. “This was the first leg of the official holiday season and had a large hurdle to overcome with monthly comparisons because of early shopping in October, but the consumer remains surprisingly resilient. The healthy year-over-year comparison is more important and clearly shows that the economy is not in a recession.”

Related Stories

Overall personal consumption expenditures (PCE) rose 0.1 percent, or $19.8 billion, reflecting an increase of $79.2 billion in spending for services that was partly offset by a $59.5 billion decrease in spending for goods, BEA noted. Within services, the largest contributor to the increase was spending on housing. Within goods, spending on new motor vehicles, mainly new light trucks, was the leading contributor to the decrease.

In November, real PCE, adjusted for inflation, inched up less than 0.1 percent, reflecting a decrease of 0.6 percent in spending on goods and an increase of 0.3 percent in spending on services. Within goods, spending on new motor vehicles was the leading contributor to the decrease. Within services, the largest contributor to the increase was spending on food services and accommodations.

The PCE price index increased 0.1 percent. Excluding food and energy, the so-called core PCE price index was up 0.2 percent. Prices for goods decreased 0.4 percent and prices for services increased 0.4 percent. Food prices rose 0.3 percent and energy prices decreased 1.5 percent. Excluding those sectors, the PCE core price index was up 0.2 percent.

From the same month one year ago, the PCE price index for November increased 5.5 percent, as prices for goods were up 6.1 percent and prices for services gained 5.2 percent. Food prices increased 11.2 percent and energy prices increased 13.6 percent. Excluding food and energy, the PCE core price index rose 4.7 percent from one year ago.

Personal income increased 0.4 percent, or $80.1 billion, in November, according to BEA. Disposable personal income (DPI), a key gauge for retail spending, rose 0.4 percent, or $68.6 billion. Real DPI was up 0.3 percent in November.

The increase in personal income in November primarily reflected increases in compensation and personal income receipts on assets. The rise in compensation was attributed to gains in private wages and salaries in services-producing industries and goods-producing industries.

Personal outlays increased $26.6 billion in November. Personal saving was $461.2 billion in November and the personal saving rate–personal saving as a percentage of disposable personal income–was 2.4 percent.