WASHINGTON — Consumer spending across the U.S., including apparel, is uneven as luxury revenue grows and discounters lag the high end, according to a Federal Reserve report.
The Fed’s Beige Book survey, an anecdotal snapshot of economic activity for October through mid-November that was released on Wednesday, said the nation’s overall economy is growing though the retailing outlook for holiday spending was cautious. The findings were based on interviews with business officials conducted by the Fed’s 12 regional banks.
Sales for the six-week period covered in the report point to growth in luxury goods sales, including designer apparel, the Fed said. However, discount stores in at least three regions reported restraint among consumers.
“Retailers in the Dallas, Kansas City and New York districts reported that demand for premium merchandise has been noticeably stronger than that for lower-priced lines, with some contacts suggesting that lower-income households might have been more greatly affected by high energy prices,” the Fed said.
In a separate study, the Commerce Department said overall U.S. consumer spending increased 0.7 percent in October, which includes a 1.5 percent gain in sales for nondurable goods such as apparel, footwear and food. In September, consumer spending gained 0.6 percent.
The Beige Book showed that consumer spending in Minneapolis, Philadelphia, Kansas City and San Francisco was strong.
“Most store and mall managers reported solid year-over-year sales gains and almost no stores reported declines compared with last year,” the Kansas City Fed reported. “Sales of luxury items, such as jewelry and designer clothing, were reported as especially strong at several stores.”
In Minneapolis, a major retailer “reported same-store sales up 6 percent in October compared with a year ago, while a Minnesota-based women’s apparel chain said October same-store sales were up 7 percent compared with last year.” A mall manager in the region “expects a 4 to 5 percent increase in holiday sales’’ over 2003. The National Retail Federation has pegged holiday sales to gain 4.5 percent against last year.
In the Cleveland region, “some contacts had expected sales to strengthen following the presidential election, but sales through the first half of November don’t appear appreciably better than before,” the Fed said. “Accordingly, firms are cautious in their forecasts for the upcoming holiday selling season, anticipating, at most, only slightly better sales than at this time a year ago.”
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Merchants in the Dallas region said they were looking forward to the scheduled Jan. 1 elimination of global apparel and textile quotas and the expected wholesale price declines of 13 to 18 percent. Despite the savings, merchants told the Fed they “do not expect to reduce selling prices. They say lower costs will translate into more normal profits.”
Also on Wednesday, the Business Roundtable reported executives expect the U.S. economy to expand by 3.5 percent next year, down from the anticipated growth of 4 percent this year. The roundtable is a group of 150 executives from companies including Sears, Sara Lee Corp. and DuPont. The executives cited rising health care costs as the “greatest cost pressure to corporate America.”