The year is off to a sluggish start for the U.S. economy — and a decline in spending on clothing and footwear is partly to blame.
Consumer spending (which accounts for more than two-thirds of the country’s GDP) grew just 1.1 percent in the first quarter of 2018, the lowest rate since 2013. This was driven in part by a slowdown in discretionary categories like shoes, apparel and cars, as well as food and beverages.
While the overall economy took a hit from the deceleration, increasing at a 2.3 percent annual rate, economists say that underwhelming results are typical for the first quarter of the year due to a seasonal calculation. With many households getting their tax returns this month and seeing more money back following the passage of the Trump administration’s income tax plan, spending is expected to rebound by the second quarter.
(Before retailers get too excited, however, a recent survey from the National Retail Federation and Prosper Insights & Analytics found that more taxpayers than ever said that they planned to put their return money in savings, with only 10 percent responding that they expected to “splurge” on dining out, spa trips or apparel.)
With a strong job market, high consumer confidence and growing disposable income — at 3.4 percent in the first quarter, the largest increase since 2015 — there is at least some hope for companies that rely on shoppers’ dollars.
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