US President Joe Biden released a statement earlier this week (27 July) in support of a new bill to lower inflation, called the US Inflation Reduction Act 2022, however, apparel industry experts tell Just Style the impact it will have on the wider apparel industry will depend on the speed at which the bill is passed and how quickly it can bring down inflation.
Apparel industry consultant Bob Antoshak tells Just Style exclusively: “Although details of the legislation are yet to be released, major elements of the bill would provide mechanisms to ease inflation for American consumers.
“This would be via a reduction in inflation-fuelling government spending and a realignment of taxation that will impact higher income consumers (which would in effect pay for the legislation), as well as provide investment incentives for consumers and businesses to switch to more environmentally friendly sources of energy.”
He explains that in both cases, depending how the final legislation is drafted, it could represent positive developments for the apparel industry.
However, Antoshak points out that even so, it could take months for the effects of a codified legislation to be felt in the broader economy and by consumers.
He says: “The hope of the legislation is that its net-effect will provide economic benefits while not adding to the government debt. Time will tell.”
The University of Delaware’s associate professor of fashion and apparel studies, Dr Sheng Lu agrees that it is hard to tell how soon this bill will get passed in Congress and whether it could bring down inflation quickly enough.
He points out: “The hiking inflation in the US has significantly discouraged consumers’ spending on clothing and hurt the apparel industry.”
Dr Lu is also concerned that retailers’ inventory level is rising and implies that companies may have to offer deep discounts or cancel future sourcing orders.
He says: “Thus, any legislation or policy that can help reduce inflation and boost consumers’ confidence in the economy should help.”
Antoshak is also keen to note that although the legislation encourages the expanded use of environmentally-friendly sources of energy provisions, it also includes incentives to continue the use of fossil fuels, and says: “This appears to be a compromise to bring on the necessary support for passage of the bill into law.”
In an official statement President Biden explained: “This bill will reduce the deficit beyond the record-setting US$1.7 trillion in deficit reduction we have already achieved this year, which will help fight inflation as well.”
He added: “If enacted, this legislation will be historic, and I urge the Senate to move on this bill as soon as possible, and for the House to follow as well.”
Earlier this month the American Apparel & Footwear Association (AAFA) told Just Style an end to Section 301 Tariffs would be the solution to rising US inflation levels as official June figures revealed overall inflation was up 9.1% versus last year with apparel increasing 5.2%.
The data released by the US Census Bureau earlier this month (13 July) showed the all items index increased 9.1% for the 12 months ending June, which was the largest 12-month increase since the period ending November 1981.
The AAFA, and National Council of Textile Organizations (NCTO) had not responded to Just Style’s request for comment at the time of going to press.
Meanwhile, the USFIA said it is unable to comment at this stage as it is still analysing the legislation.