Clothing Stores NAICS 458110

Dec 27, 2025 - Slower Growth Expected

• The US clothing stores industry is projected to grow at a CAGR of 2.6% between 2025 and 2029, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is slower than the overall economy‘s anticipated growth. Consumer sentiment remained low through 2024 as policy uncertainty rose, affecting the retail and wholesale industries. Factors that continue to limit consumer spending are lower consumer sentiment levels, higher interest levels, and elevated price levels. Real disposable income is being limited by a slow rise of employment and higher consumption prices, with a projected increase of real disposable income of 1.8% in 2025 and 1.6% in 2026. The report noted that some shifts in consumer behavior persisted in 2025, including increased online shopping.
• Consumer sentiment in December 2025 reflected a cautious consumer environment with implications for clothing retailers. The University of Michigan Index rose 3.7% month over month to 52.9, though confidence remains 30% below December 2024, and 63% of consumers expect rising unemployment. Inflation expectations eased to 4.2% (1 year) and 3.2% (long run), offering some relief but not enough to shift overall caution. Meanwhile, the Conference Board Consumer Confidence Index fell to 89.1, with the Present Situation Index down 9.5 points and expectations holding at a recession associated 70.7. Consumers continue shifting spending toward essential, lower cost categories. For clothing stores, the trends point to ongoing pressure on discretionary apparel spending. Lower confidence, job concerns, and a pivot toward essentials suggest continued demand softness, particularly for full price and fashion driven items, while value oriented apparel may hold steadier.

• As the 2025 holiday season unfolds, clothing retailers are navigating shifting employment patterns that highlight both leaner seasonal hiring and tighter post holiday retention, according to recent data released by the US Bureau of Labor Statistics. In 2024, five key retail industries, including apparel, added 492,000 seasonal workers, a modest increase over 2023. Layoffs in early 2025 were smaller, with 29,000 employees retained compared to only 4,000 the prior year. The shift marks a departure from pre-pandemic buildups, when retailers often hired more than 600,000 workers and then shed even larger numbers after the holidays. Since 2022, hiring has averaged closer to 475,000, while retention has dropped from 127,000–168,000 in 2021–2022 to an average of about 28,000 in 2023–2025. For clothing retailers, heavily reliant on holiday demand spikes, the trend underscores a cautious labor strategy: meeting peak demand with leaner seasonal hiring while limiting long term workforce absorption.
• The retail sector’s seasonal hiring is projected to fall below 500,000 positions in Q4 2025, marking the lowest level since 2009, according to a report by Challenger, Gray & Christmas in Retail Dive. The decline follows a 4% year-over-year decline in 2024, when 543,100 jobs were added. Economic pressures, including inflation, tariffs, and rising operational costs, are prompting retailers to rely more on automation and existing staff rather than expanding seasonal headcount. While some retailers may ramp up hiring if sales outperform expectations, the muted pace of announcements suggests conservative planning. The impact of reduced seasonal hiring may result in constrained customer service capacity during peak periods and signal cautious sales expectations. Strategic staffing and operational agility will be key for retailers to navigate holiday demand amid economic uncertainty.