If there were any doubts that a major U.S. economic recovery and retail apparel and footwear rebound was in the works, a look at the March personal consumption expenditures (PCE) data released Friday by the Bureau of Economic Analysis (BEA) surfaced evidence to dispel them.
Consumer spending in clothing and footwear jumped a seasonally adjusted 15.7 percent in March compared to the prior month to $450.32 billion, after falling in April, and marking the largest monthly increase since June and the biggest monthly spend since the pandemic began.
The sharp rise in spending reflects the National Retail Federation’s (NRF) calculation of retail sales that excludes automobile dealers, gasoline stations and restaurants to focus on core retail, which showed March was up 7.4 percent seasonally adjusted from February and up 17.7 percent unadjusted year-over-year. That compared with a month-over-month decrease of 3.4 percent and a year-over-year increase of 7.2 percent in February.
“After a disappointing February, there was a perfect alignment of factors supporting a surge in shopping in March,” NRF chief economist Jack Kleinhenz said. “Further reopening of the economy was encouraged by economic stimulus payments, the public health situation improved with more vaccinations, employment grew and there was seasonal activity around Passover, Easter and spring break. Even with some stimulus money going to savings, consumers’ finances are healthy, and they are willing to spend.”
Overall PCE increased 4.2 percent, or $616 billion, in the month (4.2 percent). Real PCE, adjusted for inflation, increased 3.6 percent–goods rose 7.3 percent and services gained 1.7 percent. The PCE price index increased 0.5 percent. Excluding food and energy, the core PCE price index increased 0.4 percent.
Personal income increased 21.1 percent, or $4.21 trillion, in March according to BEA. Disposable personal income (DPI), a key gauge of retail spending potential, increased 23.6 percent, or $4.18 trillion, as real DPI rose 23 percent.
“The estimate for March 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, were distributed in March.”
Personal outlays increased $616.4 billion in March. Personal saving was $6.04 trillion in March and the personal saving rate–personal saving as a percentage of disposable personal income–was 27.6 percent.