Consumer spending on clothing and footwear in August fell to its lowest level in six months as the U.S. economy slows, according to estimates released Friday by the Bureau of Economic Analysis (BEA).
Last month, personal consumption expenditures (PCE) for clothing and footwear declined 0.7 percent to $409.21 million from $411.94 million in July. This marked six months of rollercoaster increases and declines and brought purchasing in the sector to its lowest level since March.
Following a similar pattern, the National Retail Federation (NRF) reported earlier this month that clothing and accessories store sales were down 0.9 percent month-over-month in August.
PCE on all products increased 0.1 percent, or $20.1 billion, for the month. Real PCE, adjusted for inflation, also rose 0.1 percent, or $13.9 billion. NRF’s report, based on U.S. Census Bureau data, showed overall retail sales were up 0.4 percent in August seasonally adjusted from July.
“While consumer attitudes about the economy indicate some retreating optimism, the bottom line is that consumer spending remained resilient in August and continued to be a key contributor to U.S. economic growth,” NRF chief economist Jack Kleinhenz said. “Trends remain strong, but August grew somewhat slower than July, which could reflect consumers’ concerns about the unpredictability of trade policy. It is too early to assess the impact of the new tariffs that took effect at the beginning of this month, but they do present downside risks to household spending.”
IHS Markit economists said in a recent report that new tariffs on apparel and footwear set for October and December “are expected to boost consumer prices and the cost of capital, softening the outlook for personal consumption expenditures, business fixed investment and GDP.”
BEA said the increase in real PCE in August reflected an uptick of $18 billion in spending for goods and a $1.6 billion decrease in spending for services. Within goods, recreational goods and vehicles were the leading contributor to the increase. Within services, the largest contributor to the decrease was spending for food services and accommodations.
BEA reported that personal income increased 0.4 percent, or $73.5 billion, in August, while disposable personal income (DPI), a key barometer for retail spending, was up 0.5 percent, or $77.7 billion. Real DPI rose 0.4 percent in the month.
BEA said the increase in personal income in August primarily reflected increases in wages and salaries, nonfarm proprietors’ income and personal current transfer receipts that were partially offset by a decrease in personal interest income.
Personal outlays rose $22.3 billion in August, as personal saving was $1.35 trillion. The personal saving rate–personal saving as a percentage of disposable personal income–was 8.1 percent.