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Americans Finally Opening Up Their Wallets Apparel & Footwear Continue to Outpace Total Spending Growth

Incomes improved for the second straight month in September, according to the most recently revised government data, and it seems Americans are now starting to spend, rather than save, more of their take-home pay than before.
Personal disposable (or after-tax) Income increased by 3.87%, its biggest monthly jump since November, to almost $12 trillion.

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Total personal consumption expenditures growth increased for the second month in a row in September, to 3.8% (over the same month last year) from 3.6% in August, well above the recent low of 3.2% posted in July 2011.

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Growth in consumption of apparel and footwear has been fairly stable over the past few months, increasing 5.1% on a 12-month smoothed basis in September, even with August’s increase, but remaining well above overall consumer spending growth of a 12-month smoothed 3.7%. Apparel spending growth has been slightly higher than that of footwear, but both continue to outpace overall spending.

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The personal savings rate, or percent of income people did not spend, dropped to 3.3% of disposable income from 3.7% in the prior month, well off the high of 4.4% reached in June. Personal savings fell 2.7% from the same month last year, to $395 billion, its second consecutive monthly decline.

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It also might mean that consumers have, at least for the time being, stopped deleveraging, or paying down debt. Total revolving consumer credit, which consists mostly of credit card debt, rose by .9% in August, more than July’s increase of .43%, and now stands at an adjusted $855 billion, an increase of more than four billion dollars over July’s level, signaling that consumers are increasingly using plastic for their increased spending, paying off credit card balances at a slower rate than before, or a combination of the two.

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