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Consumer Spending on Apparel Slips as Stimulus Funds Slow

Consumer spending on clothing and footwear fell a seasonally adjusted 3.6 percent in April to $464.46 billion from $481.79 billion the prior month, continuing a wobbly pattern of gains and losses over the last six months.

According to the U.S. Bureau of Economic Analysis (BEA), overall personal consumption expenditures (PCE) increased 0.5 percent, or $80.3 billion, last month. This reflected an increase of $112.6 billion in spending for services that was partly offset by a $32.3 billion decrease in spending for goods, BEA noted. Real PCE, adjusted for inflation, decreased 0.1 percent in April, with goods declining 1.3 percent and services increasing 0.6 percent, BEA said.

Within services, the largest contributors to the increase were spending for recreation and for food services and accommodations. Within goods, a decrease in nondurable goods was partly offset by an increase in durable goods. Within nondurable goods, the decrease was widespread and led by food and beverages. Within durable goods, the increase was accounted for by an uptick in spending on motor vehicles and parts.

Month over month, the PCE price index increased 0.6 percent, while the PCE core index, excluding food and energy, rose 0.7 percent. The PCE price index increased 3.6 percent from April a year ago, reflecting gains in both goods and services. Energy prices increased 24.8 percent while food prices increased 0.9 percent. Excluding food and energy, the PCE price index increased 3.1 percent in April from the same month last year.

The BEA spending report was reflective of the Census Bureau’s retail sales report earlier in the month.

“Consumers may have tapped the brakes slightly in April compared with March, but it was like going from 100 miles per hour to 85 mile per hour compared with last year,” Jack Kleinhenz, chief economist at the National Retail Federation, (NRF), said. “The fuel from stimulus checks gave a strong boost to spending in March and the fact that April numbers are very close shows spending is clearly going forward and still strong.”

NRF’s calculation of retail sales, which excludes automobile dealers, gasoline stations and restaurants to focus on core retail, showed April was down 1.3 percent seasonally adjusted from March, but up 28.8 percent unadjusted year-over-year.

Clothing and clothing accessory stores were down 5.1 percent month-over-month.

Part of the reason for the spending dip could have corresponded to a 13.1 percent, or $3.21 trillion, decrease in personal income in April according to BEA estimates. Disposable personal income (DPI), a key gauge of retail spending, dropped 14.6 percent, or $3.22 trillion. Real DPI decreased 15.1 percent in April.

“The estimate for April personal income and outlays was impacted by the continued government response to COVID-19,” BEA said. “Economic impact payments associated with the American Rescue Plan Act of 2021, which was enacted on March 11, continued but were at a lower level than in March.”

The decrease in personal income in April primarily reflected a decrease in government social benefits. Unemployment insurance also declined, led by decreases in payments from the Pandemic Unemployment Compensation program.

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