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January’s Spending Data Has Good News for Apparel and Footwear

After falling for three straight months, personal consumption expenditures (PCE) for clothing and footwear increased a seasonally adjusted 8 percent in January to $443.41 billion, according to estimates released Friday by the U.S. Bureau of Economic Analysis (BEA).

The increase reflected the January retail sales report from earlier in the month in which the U.S. Census Bureau reported overall retail sales in January were up 5.3 percent from December. Clothing and clothing accessories stores were up 5 percent month-over-month.

“We expected retail spending to ramp up in January thanks to the latest round of stimulus checks and better Covid trends and it clearly did,” National Retail Federation chief economist Jack Kleinhenz said. “There was none of the falloff in spending that we often find post-holiday and the increase was even better than expected. There is plenty of purchasing power available for most consumers… Confidence is building thanks to the availability of Covid-19 vaccines, and states and local governments are beginning to remove restrictions on economic activity. Going forward, I expect consumer spending to build on this momentum.”

Overall PCE increased 2.4 percent, $340.9 billion, for the month, while real PCE, adjusted for inflation, rose 2 percent–goods increased 5.1 percent, or $277.02 billion, and services were up 0.5 percent, or $63.7 billion. The PCE price index increased 0.3 percent.

Within goods, the increases were widespread across all categories, led by recreational goods and vehicles, as well as food and beverages. Within services, the increase was led by spending for food services and accommodations. Partly offsetting these increases was a decrease in housing and utilities, led by electricity and gas.

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Personal income increased 10 percent, or $1.95 trillion, in January according to BEA. Disposable personal income (DPI), a key gauge for retail spending, rose 11.4 percent, or $1.96 trillion. Real DPI increased 11 percent in the month.

“The estimate for January personal income and outlays was impacted by the continued federal response to the spread of Covid-19,” BEA said. “Economic impact payments and increased unemployment insurance benefits were distributed as a result of the Coronavirus Response and Relief Supplemental Appropriations Act, which was enacted on December 27. Additionally, restrictions and closures continued in some areas of the United States.”

Personal outlays increased $348.7 billion in January. Personal saving was $3.93 trillion in January and the personal saving rate–personal saving as a percentage of disposable personal income–was 20.5 percent.