Consumer spending on clothing and footwear fell in July after rising in June, following a pattern of up and down swings this year, the Bureau of Economic Analysis (BEA) revealed Friday in its “Personal Income and Outlays” report.
Real personal consumption expenditures (PCE) for clothing and footwear declined a seasonally adjusted 1.9 percent in July to $499.96 billion compared to spending of $509.74 billion the prior month. Similarly, PCE for furnishings and durable household equipment declined 1.3 percent for the month to $500.2 billion.
The decline mirrored a slowdown in retail sales in July as reported by the National Retail Federation (NRF) and the Census Bureau, as retailers continued to face supply chain disruptions. Increased Covid vaccinations also allowed consumers to shift some spending from goods to activities like going out to dinner and traveling despite the Delta variant, NRF said.
“July retail sales showed slight deceleration in spending, but nothing to derail our outlook for a record year,” NRF president and CEO Matthew Shay said. “Though the delta variant is presenting health challenges while supply chain disruptions along with unfilled job openings are presenting business challenges, the consumer and broader economy continue to display steady strength aided by advanced tax credit payments and strong gains in the labor market and personal incomes. We remain optimistic that the strength of the American consumer and ingenuity of the retail industry will produce continued growth heading into the fall.”
Census Bureau data revealed clothing and clothing accessory store sales dipped a seasonally adjusted 2.6 percent month-over-month. Furniture and home furnishings stores were down 0.6 percent month-over-month.
BEA reported overall PCE increased 0.3 percent, or $42.2 billion, for the month. Real PCE, adjusted for inflation, decreased 0.1 percent, with goods declining 1.6 percent and services increasing 0.6 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the core PCE price index rose 0.3 percent.
Within goods, decreases were widespread across most spending categories, led by motor vehicles and parts, recreational goods and vehicles, as well as clothing and footwear, BEA noted. These declines were partly offset by an increase in gasoline and other energy goods.
Within services, increases were widespread across all spending categories, led by food services and accommodations.
Personal income increased 1.1 percent, or $225.9 billion, in July, according BEA. Disposable personal income (DPI), a key gauge of retail spending, also increased 1.1 percent, $198 billion, while real DPI increased 0.7 percent in July.
“The estimate for July personal income and outlays reflected the continued economic recovery, reopening of establishments and government response related to the Covid-19 pandemic,” BEA said. “Government social benefits increased in July, reflecting new advance Child Tax Credit payments authorized by the American Rescue Plan.
Personal outlays increased $45.4 billion in July. Personal saving was $1.72 trillion in July and the personal saving rate–personal saving as a percentage of disposable personal income–was 9.6 percent.