Just before the government shutdown took effect, the U.S. Department of Commerce’s Bureau of Economic Analysis was able to squeeze out one final report for the year that showed a slight deceleration of personal income and expenditures.
Looking at historical trends, the data further revealed evidence that over the past several years, health-care costs and spending on “experiences” has eroded apparel and footwear purchases. The revelation comes even as spending on apparel was robust this past holiday shopping season.
In the monthly report, the BEA said personal income rose 0.2 percent in November after showing a month-to-month gain of 0.5 percent in October. “Wages and salaries, the largest component of personal income, increased 0.2 percent in November after increasing 0.4 percent in October,” the BEA noted.
Analysts at the BEA said the gain in personal income for November “reflected increases in wages and salaries and in farm proprietors’ income that were partially offset by decreases in personal dividend income and social security benefits.” The farm owners’ gain was the subsidy payments given out by the Department of Agriculture’s Market Facilitation Program — initiated by President Trump to offset any potential impact from trade tariffs in China.
Overall personal consumer expenditures totaled $42.5 billion, the BEA said, with $32.6 billion of it due to spending on goods and $13.2 billion for services. “Within goods, recreational goods and vehicles was the leading contributor to the increase,” the BEA stated. “Within services, the largest contributor to the increase was spending for household electricity and gas.”
Regarding recreational goods and vehicles, the BEA reported earlier this year that this segment is the fastest growing one of the economy — even outpacing total GDP growth this year. Analysts have noted the gain is due to increased consumer interest in camping, biking, hiking and boating as well as other outdoor activities — along with spending on the equipment, accessories and vehicles that support it.
By wallet share, spending on recreation and related accommodations garner about 4 percent of total household spending, which compares to 3 percent for apparel and footwear. Total health care costs eat up about 17 percent of total expenditures.
An analysis of historical data by WWD shows that the share of spending on apparel and footwear has sharply declined over time. From 2013 to 2017, the share of apparel spending shed about 100 basis points while health care gained 120 basis points. And the share of spending on entertainment increased 60 basis points while share on dining out rose 60 basis points as well.
And the apparel and footwear share of 3 percent today is in sharp contrast to the 5 percent that households doled out in 2000. Health care’s share back then totaled just 5.4 percent. Fueling the gains in health-care spending today are the aging Baby Boomer population, overall higher insurance rates and increased costs for medicine and related services.