After rising for two consecutive months, consumer spending on clothing and footwear fell 0.67 percent to $441.77 million in October, according to the Personal Consumption & Expenditures (PCE) report released Wednesday by the U.S. Bureau of Economic Analysis (BEA).
The decline follows the retail sales report from the U.S. Census Bureau and the National Retail Federation (NRF) that saw clothing and clothing accessories store sales down 4.2 percent month-over-month.
“The rise in COVID-19 cases continues to be a factor that weighs on consumer perceptions, sentiment and spending and there could be retrenchment if we cannot thwart this latest wave,” NRF chief economist Jack Kleinhenz said earlier this month.
Overall PCE increased 0.5 percent, or $70.9 billion, in October, while real PCE, adjusted for inflation, rose $63.5 billion, reflecting increases of $12.7 billion in spending for goods and $48.7 billion in spending for services. The leading contributor to the increase in spending for goods was recreational goods and vehicles based on Census Monthly Retail Trade Survey data.
The leading contributor to the increase in spending for services were spending for health care, led by hospitals. The PCE price index was unchanged from September.
Personal income decreased 0.7 percent, or $130.1 billion, in October, as disposable personal income (DPI), a key gauge of consumer spending, declined 0.8 percent, or $134.8 billion, BEA reported. Real DPI also declined 0.8 percent in October.
BEA said the October estimate for personal income and outlays was impacted by the response to the spread of COVID-19. Federal economic recovery payments slowed as pandemic-related assistance programs continued to wind down.
The decrease in personal income in October was led by a decrease in government social benefits. These primarily reflected a decline in Lost Wages Supplemental Payments, a Federal Emergency Management Agency program that provides wage assistance to individuals impacted by the pandemic.
Offsetting the decrease in government social benefits were increases in compensation and proprietors’ income, led by farm income. Within compensation, an increase in private wages and salaries was partly offset by a decrease in government wages and salaries, which fell $8.4 billion in October. Temporary and intermittent decennial Census workers boosted government wages by $3.7 billion in October.
Personal outlays increased $67.5 billion in the month. Personal saving was $2.38 trillion in October and the personal saving rate–personal saving as a percentage of DPI–was 13.6 percent.