U.S. consumer spending on clothing and footwear rose for the third consecutive month in September to $500.36 billion, up a seasonally adjusted 1.3 percent from August, according to the latest estimates from the Bureau of Economic Analysis (BEA).
Spending on furnishings and durable household equipment was essentially flat last month at $521.18 billion. Similarly, the National Retail Federation (NRF) reported earlier in October that retail sales remained strong on a monthly basis and saw another year-over-year gain in September despite an interest rate hike from the Federal Reserve and continuing inflation.
“September retail sales confirm that even with rising interest rates, persistent inflation, political uncertainty and volatile global markets, consumers are spending for household priorities,” NRF president and CEO Matthew Shay said. “As we enter the holiday season, shoppers are increasingly seeking deals and discounts to make their dollars stretch, and retailers are already meeting this demand.”
The report from NRF and the Census Bureau said clothing and clothing accessories store sales were up 0.5 percent month over month seasonally adjusted and 4.5 percent unadjusted year over year. Furniture and home furnishings store sales were down 0.7 percent month over month but up 1.5 percent year over year.
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Overall personal consumption expenditures (PCE) increased 0.6 percent, or $113 billion, for the month, reflecting an increase of $94.7 billion in spending for services and an uptick of $18.3 billion in spending for goods.
Within services, the leading contributors were housing and utilities, international travel and transportation services. Within goods, increases in prescription drugs, and motor vehicles and parts were partly offset by a decrease in gasoline and other energy goods.
Real PCE, adjusted for inflation, was up 0.3 percent, as goods increased 0.4 percent and services rose 0.3 percent. Within goods, the increase was mainly attributable to spending on gasoline and other energy goods. Within services, international travel, food services and accommodations, and health care were the leading contributors.
The PCE price index increased 0.3 percent. BEA reported prices for goods decreased 0.1 percent, reflecting a decline in prices for nondurable goods led by gasoline and other energy goods. Prices for services were up 0.6 percent, led by housing and transportation services. Food prices increased 0.6 percent and energy prices decreased 2.4 percent.
The core index, excluding food and energy, rose 0.5 percent. From the same month one year ago, the PCE price index for September increased 6.2 percent. Prices for goods rose 8.1 percent and prices for services increased 5.3 percent. Food prices were up 11.9 percent and energy prices 20.3 percent. The PCE core price index increased 5.1 percent from one year ago.
Commenting on last week’s report of a 2.6 percent increase in gross domestic product and the PCE numbers, President Biden said they show “we are making progress on our economic plan: lower inflation, higher incomes and solid growth.
“Inflation slowed in the third quarter, with energy prices coming down,” Biden said. “Gas prices have declined over $1.20 since the summer’s peak… We have more work to do. My plan will bring down prescription drug prices and energy costs starting next year. In January, seniors will see their Social Security checks increase by an average of $140 a month even as their Medicare premiums go down—the first time in a decade that has happened.”
Personal income increased 0.4 percent, or $78.9 billion, in September, according to BEA. The gain primarily reflected increases in compensation and personal income receipts on assets. The rise in compensation was led by private wages and salaries. Within private wages and salaries, services-producing industries and goods-producing industries both increased.
Disposable personal income (DPI), a key indicator for retail spending, rose 0.4 percent, or $71.3 billion for the month. Real DPI increased less than 0.1 percent in September.
Personal outlays increased $125.5 billion in September. Personal saving was $581.6 billion in September and the personal saving rate—personal saving as a percentage of disposable personal income—was 3.1 percent.