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Spending on Clothing, Footwear Lost Momentum in August

Consumer spending on clothing and footwear slowed in August, rising 0.75% to $408.65 million from $405.65 million in July, which saw an increase of 1.5% over June spending, the U.S. Bureau of Economic Analysis (BEA) reported Thursday.

This follows a similar pattern found in the U.S. Census Bureau’s monthly retail sales report where sales at clothing and clothing accessories stores were down 1.7% percent in August from July, even as they increased 6.2% year-over-year. Overall August retail sales—excluding automobiles, gasoline stations and restaurants—increased 0.1% over July (seasonally adjusted) and 5 percent year-over-year, according to the National Retail Federation.

“Clothing and footwear were among the categories with the largest increases in real spending, but this was entirely price-driven,” said James Bohnaker, associate director at IHS Markit. “A large drop in the price index for clothing resulted in a nominal spending decline in August.”

BEA’s monthly Personal Income and Outlays report showed personal income increased 0.3%, or $60.3 billion, while disposable personal income (DPI), a key barometer for retail spending, also rose 0.3%, or $51.4 billion. Personal consumption expenditures (PCE) increased $46.4 billion, also posting a 0.3% gain.

Real DPI, adjusted for inflation, increased 0.2% in August, and real PCE rose 0.2%. The PCE price index increased 0.1%, while the core index, which excluded the volatile food and energy sectors, was up less than 0.1%.

According to BEA, the increase in personal income primarily reflected increases in wages and salaries, government social benefits to persons, and non-farm proprietors’ income. The agency noted the $28.7 billion increase in real PCE in August reflected an increase of $15.3 billion in spending for goods and a $14.3 billion increase in spending for services.

Personal outlays increased $47.1 billion in August. Personal saving was $1.03 trillion in August and the personal saving rate—personal saving as a percentage of disposable personal income—was 6.6%.

“Improving household finances, fueled by solid wage gains and lower personal tax rates, will help bolster consumer spending for the next several quarters,” Bohnaker said. “Tariff-induced inflation may become a bigger concern for consumers down the road.”