As the coronavirus pandemic’s economic effects took hold, consumer spending on clothing and footwear fell a seasonally adjusted 28.2 percent in March to $2.91 billion from $4.06 billion in February, the Bureau of Economic Analysis (BEA) reported Thursday.
Compared to March 2019, spending was down 28 percent from $4.04 billion, according to BEA data. Overall personal consumption expenditures (PCE) decreased 7.5 percent, or $1.13 trillion, in the month.
Real PCE, adjusted for inflation, declined 7.3 percent. The PCE price index was down 0.3 percent, while the core index, excluding food and energy, dipped 0.1 percent.
The steep declined matched retail sales reports for the month. According to a report from the National Retail Federation (NRF), retail sales saw their biggest monthly drop on record during March as the coronavirus pandemic forced restaurants, bars and many stores to temporarily close across the nation.
“Don’t be surprised if the data going forward shows a worsening situation,” NRF chief economist Jack Kleinhenz said. “Even if the economy begins to reopen in May, consumer behavior may take a long time to adjust. The road to recovery could be long and slow.”
Clothing stores saw the biggest decline, with sales down 50.5 percent from February, while furniture store sales were down 26.8 percent and sporting goods stores were down 23.3 percent. With more people turning to e-commerce, online and other non-store sales were up 3.1 percent.
Personal income decreased 2 percent, or $382.1 billion, in March, according to BEA estimates. Disposable personal income (DPI), a key gauge for retail spending, declined 2 percent, or $334.6 billion.
“The decline in March personal income and outlays was, in part, due to the response to the spread of COVID-19, as governments issued ‘stay-at-home’ orders,” BEA said. “This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted or redirected their spending.”
BEA said the full economic effects of the COVID-19 pandemic cannot be quantified in the Personal Income and Outlays estimate for March because the impacts are generally embedded in source data and cannot be separately identified.
The decrease in personal income in March primarily reflected a decrease in compensation, as record numbers of consumers lost their jobs and many executives took pay cuts. The estimate of private wages and salaries was primarily based on data from the Bureau of Labor Statistics monthly Current Employment Statistics report as well as unemployment insurance claims data from the Department of Labor’s Employment and Training Administration.
The decrease in real PCE in March reflected a decrease of $829.9 billion in spending for services and a $104.9 billion in spending for goods. Within services, the leading contributor to the decrease was spending on health care, including physician, dental and paramedical services. Other contributors to the decrease in services were spending on food services and accommodations, as well as recreation services.
Within goods, the leading contributor to the decline was spending on motor vehicles and parts, BEA said. Partially offsetting the decreases in many categories of spending on goods was an increase in spending for food and beverages purchased for off-premises consumption.
Personal outlays decreased $1.16 trillion in March. Personal saving was $2.17 trillion in March and the personal saving rate–personal saving as a percentage of disposable personal income, was 13.1 percent.