Tariffs Deepen Retail Divide As Low-Income Shoppers Cut Back, Bank Of America Says

Retail Sales Performance - Bank of America Securities reported strong spending during the back-to-school season in August, particularly in apparel, indicating resilience in consumer activity despite inflation concerns [1] - Total retail sales excluding autos rose 1.9% year over year in August, an increase from 1.1% in July [1] Apparel and Clothing Trends - Clothing purchases increased by 4.4% in August compared to 3.5% in July, reflecting heightened demand as families prepared for the new school year [2] - Higher-income households increased their apparel spending, while lower-income households reduced purchases, leading to a widening consumption gap [2] Market Dynamics and Consumer Behavior - Analysts noted that price pressures are affecting budget-conscious consumers more severely, particularly with new tariffs impacting the supply chain [3] - Spending at discount apparel outlets grew by 1.3% in August, up from 0.8% in July, as shoppers shifted from full-price retailers [3] - Department store sales contracted by 0.8% in August, following a 0.4% decline in July [3] Category Performance - Specialty running channels saw a sharp decline compared to July, while direct-to-consumer footwear improved its performance [4] - Jewelry purchases grew by 8.6% and beauty sales expanded by 9% in August, maintaining their status as top-performing retail categories [4] - Athletic footwear and apparel lagged, declining by 2.4% in August after a smaller decline the previous month [4]