WASHINGTON -- It's been a nervous year so far on the financial fronts, but economists contend that the fundamentals are in place for moderate to healthy apparel buying as 1994 progresses.
The stock market has been riding a roller coaster, consumer confidence keeps churning, worries about inflation persist despite sanguine statistics and interest rates are moving up. Still, the economists say, the overall economy is moving ahead, and the apparel business should see some benefits.
"Apparel sales are going to grow with growth in the economy," said Marie Beninati, director, retail market strategy with Kurt Salmon Associates, a New York consulting firm. "If income increases, retail sales go up almost proportionately."
Economists are generally forecasting economic growth of between 3.5 and 4 percent in 1994, modest inflation of about 3 percent and unemployment falling as low as 6.2 percent by December, compared with March's 6.5 percent. Higher interest rates -- as long as they don't get too high -- and a recent surge in purchases of big-ticket items should blunt demand for houses and cars, leaving more spending money available for apparel.
The economists foresee little impact on apparel spending due to recent gyrations in the financial markets.
"If I were a retailer or a manufacturer, I'd say first of all, if the stock market doesn't cause a general overall decline in the economy, the demand factors are going to be good because the economy is expanding," said Martin A. Regalia, chief economist of the U.S. Chamber of Commerce here.
"A correction in the financial markets does not necessarily mean people won't buy, especially that they won't buy clothing."
He adds, however, they might be deterred from shopping the top-priced luxury lines.
Although news of plummeting stock values tends to make consumers, even noninvestors, uneasy, the primary income stream for most people -- their salary -- is far more important to spending, economists said.
"Mainly, individual investors are riding it out. It's speculators who are affecting the market right now," Regalia noted.
The economists interviewed also advised businesses to keep a closer eye on unemployment reports rather than on those monthly measures of consumer confidence, the University of Michigan's index of consumer sentiment and the Conference Board's consumer confidence index.
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