Consumer spending on clothing and footwear fell a seasonally adjusted 2.1 percent in February to $498.97 billion after increasing 7.1 percent the previous month, the Bureau of Economic Analysis (BEA) said Thursday in its Personal Income and Outlays report.
Similarly, spending on furnishings and durable household equipment declined 2.7 percent in the month to $495.32 billion. Overall personal consumption expenditures (PCE) increased 0.2 percent, or $34.9 billion. BEA said the increase reflected an increase of $93.8 billion in spending for services that was partly offset by a $58.9 billion decrease in spending for goods. Within goods, spending on motor vehicles and parts was the leading contributor to the decrease.
Real PCE, adjusted for inflation, decreased 0.4 percent, as goods dropped 2.1 percent and services increased 0.6 percent.
In reporting monthly retail sales earlier this month, the National Retail Federation said the pace slowed compared to January as inflation drove up prices and the lingering effects of the Covid-19 Omicron variant affected the supply chain.
“With the highest levels in 40 years, there is no doubt continued increases in inflation are hitting household purchasing power and likely restraining spending,” NRF chief economist Jack Kleinhenz said. “We shouldn’t be surprised by the slower pace of sales given that purchases had surged in January and the upward revisions made to those numbers. And the double-digit year-over-year increase was expected given that much of the economy was still in stay-at-home mode a year earlier. February’s sales are another sign of the economy’s resilience, but the conflict in Europe is an increasing headwind that could dampen spending around the globe.”
For the month, sales at clothing and clothing accessories stores were up 1.1 percent month-over-month seasonally adjusted and 31 percent unadjusted year-over-year, according to the U.S. Census Bureau. Furniture and home furnishings store sales declined 1 percent for the month, but were up 7.4 percent for the year.
“Our outlook remains constructive, with solid retail sales growth for all of 2022 increasing by 6 percent to 8 percent,” NRF president and CEO Matthew Shay said. “Consumer financial health can continue if current pressures in the economy are moderated by sound policy decisions that do not compound the challenges our economy is already facing.”
The PCE price index increased 0.6 percent, while the core price index, excluding food and energy, rose 0.4 percent. The PCE price index for February was up 6.4 percent from a year earlier, reflecting increases in goods and services. Energy prices increased 25.7 percent while food prices increased 8 percent. Excluding food and energy, the PCE price index for February rose 5.4 percent in the 12 months.
Personal income increased 0.5 percent, or $101.5 billion, in February, while disposable personal income (DPI), a key barometer for retail spending, gained 0.4 percent, or $76.1 billion. Real DPI decreased 0.2 percent in February.
Personal outlays rose $37.3 billion in February. Personal saving was $1.15 trillion in February and the personal saving rate–personal saving as a percentage of disposable personal income–was 6.3 percent.
“The estimate for February personal income and outlays reflected the continued economic recovery and government response to the Covid-19 pandemic,” BEA said. “In February, government social benefits declined, reflecting the continued winding down of pandemic-related assistance programs.”