Is cheap clothing going away?
Host Mary Walden asks, “Mike, for the last couple of decades, clothing prices have been dropping relative to other prices. Their decline has at least helped families deal with rising gas and healthcare prices. But now I understand low clothing prices may soon be a thing of the past. What’s happened?”
N.C. State University economist Mike Walden responds, “I love clothes. I’m a clothes hound. I attribute this to that fact that my great-grandfather was a clothier, had a tailor shop. So, I have been absolutely enthralled by the fact that for the last, roughly, 20 years, clothing prices have actually gone down relative to other prices.
“Just some data: If you look since 1986, the average increase for all prices has been 112 percent; for clothing prices, only up 19 percent, barely anything. And this has resulted in people of course being able to buy more clothes, better clothes etcetera. And it’s certainly been tied to how the clothing industry has changed.
“A lot of production now is off shore, using lower cost labor. But we now have some data that suggests this may be changing. Labor costs in countries like China have been going up very dramatically, and we’ve seen now for the last three years clothing prices have actually been rising in line with all other prices.
“So, we may be seeing the end of the reduction in clothing prices. Now, will this cause people to stop buying clothing? No. But what it will mean is the big bargain that we’ve seen in clothes probably will not be as much in the future as it’s been in the past.”
Category: Economic Perspective