Consumer spending on clothing and footwear bounced back in July, increasing 0.6 percent to $409.77 million, after falling in June, according to the Bureau of Economic Analysis’ (BEA) Personal Income and Outlays report released Friday.
Reflective of other unsteady economic indicators, personal consumption expenditures (PCE) on clothing and footwear have been in an up-and-down cycle in the first seven months of 2019.
The increase in spending corresponds with the 0.9 percent seasonally adjusted gain in core retail sales that exclude automobile dealers, gasoline stations and restaurants reported in August by the U.S. Census Bureau. That report showed clothing and accessories store sales were up 0.8 percent on a month-over-month basis.
Commenting on that report, Jack Kleinhenz, chief economist at the National Retail Federation, said “July’s strong results are consistent with a confident consumer. Households are in good shape with spending and that should continue as long as the labor market remains healthy.”
However, Kleinhenz noted that the report looks backward at what was happening a month earlier and that “the impact of volatile financial markets and increased trade tensions in recent weeks may put a wind of caution in consumer spending as we move forward in 2019.”
The BEA report showed overall PCE was up 0.6 percent, or $93.1 billion, in July. The PCE price index increased 0.2 percent, as personal income rose 0.1 percent, or $23.9 billion. Real PCE, adjusted for inflation, increased 0.4 percent, BEA said.
The $56.9 billion increase in real PCE in July reflected an increase of $36.4 billion in spending for goods and a $23.8 billion increase in spending for services, BEA reported. Within goods, recreational goods and vehicles were the leading contributor to the increase. Within services, the largest contributor to the increase was spending for household electricity and gas.
Disposable personal income (DPI), a key indicator for consumer spending, increased 0.3 percent, or $44.4 billion, in the month. Real DPI was up only 0.1 percent in July, as inflation creeps back into the economy. Macroeconomic Advisers by IHS Markit said it expects core consumer price inflation based on the PCE index to rise to 2.1 percent by 2021. BEA noted that the rise in personal income reflected increases in compensation of employees and government social benefits that were partially offset by a decrease in personal interest income.
Personal outlays increased $96.4 billion in July, as personal saving was $1.27 trillion. The personal saving rate–personal saving as a percentage of disposable personal income, was 7.7 percent.