Consumer spending on clothing and footwear in the U.S. ticked up 0.4 percent in July compared to June to $409.28 billion, but was still 1.3 percent below the $414.54 billion spent in July 2019, according to estimates released Friday by the Bureau of Economic Analysis (BEA).
It was the third straight month for increased consumer spending in the sector after bottoming out in April as the country crawled out of recession caused by the coronavirus pandemic and subsequent retail shutdowns. BEA said the July estimate for personal income and outlays was impacted by the response to the spread of Covid-19. Federal economic recovery payments continued, but were at a lower level than in June, and government “stay-at-home” orders lifted in some areas of the country.
The category’s increased consumer purchasing followed a similar result reported in the monthly retail sales report form the Census Bureau. It showed clothing and clothing accessory store sales were up a seasonally adjusted 5.7 percent month-over-month seasonally adjusted, but down 19.6 percent unadjusted year-over-year.
“Retail sales are starting the third quarter on a solid footing considering the nosedive we saw this spring, but we have to remember that there’s uncertainty about economic policy and that the resurgence of the virus is putting pressure on the fledgling recovery,” Jack Kleinhenz, chief economist at the National Retail Federation, said. “While households are spending, they are anxious about their health and economic well-being, so they are being pragmatic.”
Overall personal consumption expenditures (PCE) increased 1.9 percent, or $267.6 billion, in the month and the PCE price index increased 0.3 percent. Real PCE, adjusted for inflation, increased 1.6 percent, or $200.6 billion in July, with an increase of $82.1 billion in spending for goods and a $121.2 billion rise in spending for services, BEA reported.
Within goods, the leading contributor to the increase was spending for new motor vehicles. Within services, the leading contributors to the increase were spending for health care, as well as food services and accommodations.
Personal income increased 0.4 percent, or $70.5 billion, in July, while disposable personal income (DPI), a key barometer for retail spending, rose 0.2 percent, or $39.9 billion. Real DPI decreased 0.1 percent for the month.
BEA said the increase in personal income in July was more than accounted for by compensation of employees as portions of the economy continued to reopen. Proprietors’ income and rental income of persons also contributed to the increase.
Partially offsetting these increases were decreases in government social benefits and income on assets. Unemployment insurance benefits, based primarily on unemployment claims data from the Department of Labor’s Employment and Training Administration, decreased in July.
Personal outlays increased $270.6 billion in the month. Personal saving was $3.19 trillion and the personal saving rate–personal saving as a percentage of disposable personal income–was 17.8 percent.