Friday, March 19, 2010

Spending on Clothing and Footwear Falls Below 3% of Disposable Income for First Time in U.S. History

Americans spent almost $326 billion on clothing and footwear in 2009 (data here), which as a share of disposable personal income (data here), was the lowest ever in U.S. history, at only 2.98%. Spending on clothing as a share of income has fallen in 20 out of the last 22 years, from 4.78% in 1988 to less than 3% in 2009. Compared to 1950 when spending on clothing was 9% of income, spending last year was less than one-third that amount, and compared to spending on clothing of 6% of income in 1970, spending last year was half of that share.

In other words, clothing is now cheaper than at any time in history, when measured as a share of disposable income. And there's a better selection of clothing now, at higher quality, and with options available today like no-iron fabrics and washable silk that have become increasingly available in recent years. And when it comes to footwear, I don't think anybody would argue that the selection and quality today are far ahead of past decades - just think of the athletic footwear options today vs. Chuck Taylor Converse All-Stars, which were at one time "state-of-the-art" and were only available in two colors (black and white) until 1966.

The chart below explains the falling cost of clothing and footwear as a share of disposable income, by displaying the CPI for Clothing (data here) and the CPI for All Items (data here). Since 1992, prices in general have risen by 57%, while prices for clothing have fallen by 8.5%. With significantly falling prices in real terms, clothing has become more and more affordable almost every year, requiring smaller shares of our income, which has freed up disposable income that can now be spent on other consumer goods (think electronics, travel, entertainment, etc.).

Bottom Line: As a direct result of increased global competition, advances in technology, and increased worker productivity, clothing is cheaper today both in inflation-adjusted prices and as a share of disposable income. We have more clothing today per person than any previous generation (think of the number and size of closets in a typical 1930s, 1940s or 1950s era home), and the clothing and footwear are cheaper and better than ever, contributing to a gradually rising standard of living for the average American.


29 Comments:

At 3/19/2010 3:32 PM, Blogger pkd said...

Oh, the humanity! Think of all the unemployed cobblers and seamstresses!

 
At 3/19/2010 4:20 PM, Anonymous Lyle said...

To boot shoe repair has almost disappeared. In the 1950's one would have the heels and sometimes the soles of ones shoes fixed. But today in the US the price of a new pair of shoes is such that it is not economically justifiable for a lot of shoes. What shoe repair places exist clearly were set up a long time ago with ancient machinery, and are just holding on. Likewise with clothing repair, and other things, we have made repair cost almost as much as a new item, thereby killing the repair business. (Another example is the TV repair business, which was big in the 1950s, but due to transistorized tvs and low costs has died as well)

 
At 3/19/2010 4:24 PM, Anonymous Anonymous said...

This sounds like a textbook example of "voting with your feet"!

 
At 3/19/2010 4:45 PM, Blogger sethstorm said...

This comment has been removed by the author.

 
At 3/19/2010 4:47 PM, Blogger sethstorm said...

Well, that also mirrors a decline in quality. I still have some US-sewn shirts and they've outlasted their imported, Third World counterparts many times over.

Make something in a country like India, China, Burma/Myanmar, Vietnam, or Brazil, expect junk.

 
At 3/19/2010 5:03 PM, Anonymous Benny The Man said...

Jeez, I can remember my mother making her own dresses from paper cut-outs.
Wearing my older brother's hand-me-dwons.

Now, go to Ross Dress For Less, and you can buy (among the uglies) some nice pants for the price of a lunch.

The price of manufactured good, with the exception of military hardware, just goes down and down.

Military hardware just becomes more and more expensive all the time. New, Gerald Ford class aircraft carriers are $14 billion a pop. That's with a "b."

 
At 3/19/2010 5:29 PM, Blogger PeakTrader said...

Seth, clothing isn't a durable good.

Nonetheless, it seems, durability has decreased less than prices or increased more than prices. That means better bargains or improvements in living standards.

 
At 3/19/2010 5:32 PM, Anonymous gettingrational said...

Are prices down because of automation or lower labor costs? Clothing and shoes are labor intensive because of the countours of human beings. People in the U.S. adorn themselves with clothing and their emblazonned emblems without thinking who made them.

Nike is concerned and has adopted a Nike Code of Conduct. They know that their company has history of producing products in sweat shops and with child labor. Some people condone these practices but not even Nike will tolerate it any more.

Nike says that problems persist.

Nike should move their manufacturing to locales where their Code of Conduct is adhered to.

 
At 3/19/2010 5:47 PM, Anonymous Anonymous said...

Military hardware just becomes more and more expensive all the time.

One modern fighter/bomber, like the F15-E or F/A 18, has more destructive capacity than an entire squadron of WWII era bombers. And since it can defend itself, it eliminates the need for a fighter escort as well. One plane, doing a job that used to take scores of planes and highly trained pilots to do. You haven't got a clue.

 
At 3/19/2010 5:53 PM, Anonymous Anonymous said...

Amazing, we get better clothes at a lower cost, increasing our standard of living. Millions in the third world get an opportunity to lift themselves out of crushing poverty. And the only whiner is sethstorm and his band of national socialists.

 
At 3/19/2010 5:56 PM, Anonymous Benny The Man said...

Anon-

You make my point for me.

With careful and prudent spending, our military outlays should be going down, not up, every year, for precisely the reasons you mention.

 
At 3/19/2010 6:07 PM, Blogger PeakTrader said...

Seth, if you want clothing made in the U.S., go to Google and type in "clothing made in USA." You'll find hundreds of producers, although illegal aliens may be producing them.

 
At 3/19/2010 7:04 PM, Blogger juandos said...

"if you want clothing made in the U.S., go to Google and type in "clothing made in USA.""...

Well PeakTrader that's a heck of a suggestion...

Thanks...

 
At 3/20/2010 1:57 AM, Blogger PeakTrader said...

Juandos, maybe Seth wants english-speaking white folks to make his clothing. I don't know.

 
At 3/20/2010 5:28 AM, Anonymous Frank said...

I really enjoy buying my clothes at low prices at Wal-Mart. I look really good in my $9.00 Wal-Mart shirts, I'm not sure why the women I try to date call me cheap.

 
At 3/20/2010 6:21 AM, Blogger Tim Schilling said...

I wonder if there's been any thought given to the impact of the overall economy. While I know the economy has been showing signs of improvement, unemployment is still high. And I've read several surveys that indicate spending on clothing is one area where people cut back when times are tough.

However, that does not explain the longer term trend, which is still encouraging.

 
At 3/20/2010 7:38 AM, Blogger juandos said...

"maybe Seth wants english-speaking white folks to make his clothing"...

Hmmm, I've wondered about that myself on occassion PeakTrader but that smacks of a bit of bigotry, something I'm sure that sethstorm is anything but a bigot...

Besides as an aside it seems that diversity training is a waste...

Makes me wonder how much the stock holders are being ripped off for this sort of training...

Tim Schilling says "I wonder if there's been any thought given to the impact of the overall economy"...

By whom? The folks that shop at Walmart?

 
At 3/20/2010 10:20 AM, Anonymous Nortman said...

Better quality? Not quite. Also, men and maybe women have been defining clothing downward. Just look at those old baseball games where the men all wore suits and hats and young boys were bought suits, also.

 
At 3/20/2010 12:28 PM, Anonymous Anonymous said...

Especially cheap after US companies and unions went bust....

 
At 3/20/2010 2:46 PM, Blogger Ron H. said...

Juandos asked,
Makes me wonder how much the stock holders are being ripped off for this sort of training...

well, I suppose all of it that can't be passed on as higher prices.

And, from the link you provided, such diversity training may have just the opposite effect of that intended.

"And research by a team of sociologists on more than 800 companies over three decades has found that the best diversity training programs make little difference in who gets hired and promoted, and many programs actually decrease the number of women and minorities in management."

Just as the ADA has apparently reduced the number of Americans
with disabilities who get hired.

Who would have thought...

Diversity training does serve it's real purpose, though, which is to protect businesses from lawsuits. If an employee is diversity trained, he/she can be fired for straying outside the guidelines, and the employer is off the hook.

Sorry, guess I'm getting pretty OT here.

 
At 3/20/2010 2:54 PM, Blogger Ron H. said...

Frank, I can only guess that you are trying to date the wrong type of women. They sound like shallow exploiters who are only interested in your appearance, and not in the beautiful person you are.

You can attract a better class of women by driving a Porsche. Then your $9.00 Walmart shirts will work just fine.

 
At 3/21/2010 3:28 PM, Blogger Ron H. said...

Actually, Benny, the Gerald Ford class carriers are expected to cost about $9B a pop. The total cost for the first one, the Gerald Ford, at $14B includes all startup and R&D costs. Those are both ridiculously large numbers, but they are quite a ways apart.

I'm not going to spend the time finding numbers, but I suspect that this one ship, fully loaded & headed for battle, will be more lethal than the entire Pacific Fleet was during WWII.

I think if you compare the cost of this ship to the cost of the WWII Pacific Fleet, you will find that the former costs less. Remember to add the cost of all aircraft and to adjust for inflation.

Anon's point, and mine, is that measured in $$ per unit of destructive power, the price of military hardware HAS gone down over time, just as you think it should.

 
At 3/23/2010 9:23 AM, Blogger OBloodyHell said...

> Make something in a country like India, China, Burma/Myanmar, Vietnam, or Brazil, expect junk

...Or Japan.

Wait.

No. That's not right.


:-/

Dumbass.

I've learned to pay attention to who makes stuff. Some companies do a good job of providing quality, others suck.

I had a friend (younger than me) who was in college in the very late 90s-00s. He paid his bills working in sales at Burdines, and was thus very familiar with quality and prices. One company he said was always garbage but people were often stupid enough to buy was Tommy Hilfigger. The clothing was crap but it still sold to people too stupid to "figger" it out.

Around that same time, I learned first hand the difference in quality between Dockers and Savane pants -- I bought a virtually identical pair -- essentially the same cut, color, price etc. -- of each and wore them roughly the same number of times, washed them the same number of times for a month (about 4x apiece). You could LITERALLY and EASILY see how much better the Dockers stood up to the wear and tear of a single month. The Savanes were notably more faded and notably more worn looking in the seat.

I took the Savanes back, bought another pair of Dockers, and have never bought another pair of Savanes in the 10+ years since... I've been a reliable purchaser of Dockers ever since, and never had any complaints so far about low quality. American? Indonesian? Don't CARE.

And for the heck of it, I just checked three pair that are all more than 3 years old (I haven't bought any new pants in about that much time), and are still wearing fine: Nicaragua, Dominican Republic, Cambodia.

It pays to be a good consumer and pay attention to stuff like this, and not some idiot knee-jerk libtard "Buy American" union hack supporter.

But by all means, Seth -- keep on buying overpriced "American"-made garbage.

 
At 3/23/2010 9:27 AM, Blogger OBloodyHell said...

> You haven't got a clue.

He said he was "gettingrational"...

He didn't say he was even close to being there.

LOL.

 
At 3/23/2010 9:48 AM, Blogger OBloodyHell said...

> With careful and prudent spending, our military outlays should be going down, not up, every year, for precisely the reasons you mention.

I'll kind of straddle the point on this one.

Yeah, the military DOES do some amazing things with their hardware that wasn't even vaguely imaginable just 50 years ago.

OTOH, the procurement and specifications process is a pork-laden nightmare that can apparently only be fixed by firing about 50% of the generals and really, seriously attacking the whole process with some long-term individuals and the support of some really committed politicians.

If you want to actually learn a bit more about some people who tried and somewhat failed to fix this (They produced the Lightweight" Fighter, the F/A-18, but the techniques to do it didn't "stick", and even it got someone porked up in the end, though it was much better than most post-Korean War programs), the autobiography of Col. John Boyd is worth reading, and some people in his Fighter Mafia like Pierre Sprey have continued fighting Boyd's losing "good fight".

 
At 3/23/2010 9:54 AM, Blogger OBloodyHell said...

> Just look at those old baseball games where the men all wore suits and hats and young boys were bought suits, also.

Not an awful point. It's getting so even interviews for professional jobs don't expect suits, and you look "old fashioned" or overdressed if you wear a full suit to a job interview. Dress pants, long sleeve shirts, and ties, yeah, but even a two-piece, much less a three-piece suit is only for some very limited jobs any more.

I don't think that constitutes as much a significance as it might (people often only owned one suit and used it for five years or more) but that's only an impression, not something I'd want to be held to.

 
At 3/24/2010 6:56 PM, Blogger Erica Amina said...

Seriously? I wouldn't have guessed. But I definitely keep my DC shoe cobbler in business. My shoes are on average $500 a pair and I am definitely not throwing them away when the heel cap wears out.

 
At 3/26/2010 12:57 PM, Blogger szpiechz said...

I'm curious to see how this trend might differ if we break down the analysis to focus on various income brackets. Even though the poor will tend to buy less expensive clothing, do they end up spending more of their total income on it? Is the slope of the trend shallower for the poor? Is is sharper? What about for the rich?

 
At 4/02/2010 5:14 PM, Anonymous Kathleen Fasanella said...

One reason the percentage of disposable income spent on clothing has fallen is that we have a lot more disposable income than we used to. For example, circa 1970, disposable income was about $4,000. At 6% (listed on the chart above), we get $240 spent on clothing per year. When you consider the increase in disposable income since then (adjusted for inflation) and even at today's 3%, the median is spending $810 a year on clothing. So while the chart shows we're spending half what we were as a percentage of disposable income, we're spending over 300% more since 1970 in real dollars adjusted for inflation.

Yes, this chart shows that the relative percentage of our disposable income spent on clothing has not remained static. Were we to continue spending said 6% (1970) of disposable income on clothes today -even tho our disposable income has increased 43% (adjusted for inflation), we would have to spend $1,600 each for the chart to flat line amounting to a 600% increase in clothing purchases.

Which is not to say that prices haven't fallen according to myriad causes - one of which is my second point. We have tons of clothes but they are not of the same caliber as before so yes, they should cost less. Previously, a woman wore a blouse with interfacings, more involved sewing, buttons, trims etc but today, that same woman is wearing a tee shirt with some dye slapped on it. While it may provide the same function of covering a body part, it is neither the same caliber or cost of product. Menswear is a good market to analyze for this reason; apparel choices have evolved but not as radically. It's better to look at outerwear, suiting and work attire. Prices of apparel in these categories is relatively flat if not increasing slightly once adjusted for inflation and product caliber.

With respect to expenditures in the clothing production process, these costs have surely declined with offshoring. However, the expenditures previously spent on production are now being allocated to marketing budgets and retail mark downs. Money is taken from production and applied to branding, so the actual and total costs getting product into consumer's hands has remained static or increased. Margins are thinner than ever.

Which is not to say I wouldn't want people to spend more on clothes. Actually, I would prefer they bought fewer but better clothes. Fewer branded tees and toxic designer denims and more garments with integrity beyond an embroidered or screen printed logo.

 

Post a Comment

Links to this post:

Create a Link

<< Home