As the holiday season reaches its peak, a unique set of economic conditions continues to shape how and where Americans choose to spend their money. Beyond the cheer and traditions, the broader economic environment—including wage growth, inflation trends, and shifting consumer behavior—is redefining spending priorities this year.
Resilient Consumer Spending Amid Economic Challenges
Despite challenges such as persistent inflation and higher interest rates, early indicators suggest that American households are still prioritizing holiday spending. The National Retail Federation (NRF) has projected a 2.5% to 3.5% increase in winter holiday spending for 2024 compared to 2023. This translates to total holiday sales of $979.5 billion to $989 billion in November and December, up from $955.6 billion during the same period last year. The historical trend shows the resilience of holiday retail sales in the U.S., even during economic downturns. With 2024 forecasted to surpass $979 billion, this season will likely set another record. Key factors driving this growth include evolving consumer habits, robust online shopping, and continued demand for holiday spending.
Economic Growth and Consumer Optimism
The strong performance of the U.S. economy in Q3 2024, with a 3.1% annualized growth rate, sets a positive tone for the holiday season. Personal spending has been a key driver of this growth, surging at its fastest pace since early 2023.
At the heart of this spending power lies wage growth and inflation moderation. Salaries and wages grew by 5.6% year-over-year in October 2024, giving households more discretionary income. At the same time, inflation fell to its lowest level since 2021, easing the financial strain on consumers and enhancing their purchasing power. These indicators provide consumers with the confidence to continue spending, making the 2024 holiday season look promising despite broader financial concerns.
Impact of Election Year on Holiday Shopping Behavior
As we dive into the peak of the holiday shopping season, many marketers are reflecting on how the 2024 election may have influenced consumer spending. While presidential elections typically don’t cause dramatic shifts in holiday shopping trends, this year brought its own set of distractions and concerns that impacted how people shopped.
The election noise often competes with holiday advertising, making it harder for brands to grab shoppers’ attention. With the election just behind us, the media focus on political developments pushed up advertising costs, as companies scrambled for visibility in an already crowded media landscape. Additionally, the economic messages from presidential campaigns may have affected consumer sentiment, prompting some to be more cautious with their spending.
However, Americans have always shown resilience when it comes to holiday shopping, even during election years—and this year is no different. While election concerns may have temporarily diverted attention, the demand for holiday shopping has stayed strong. Consumers continue to prioritize their holiday traditions, proving that, despite the political noise, the holiday shopping season remains a significant economic force.
Recommendations for Shoppers
Regardless of the economic state, it’s essential to shop within your budget. While holiday sales and discounts can be enticing, maintaining financial discipline is key. According to the Federal Reserve Bank of New York, credit card balances among U.S. consumers have reached historically high levels. Instead of borrowing to fund holiday purchases, consider these tips:
- Outline a clear budget for your holiday spending and stick to it.
- Make a list of items you want to purchase ahead of time to avoid impulse buying.
- Watch for discounts and seasonal sales to save on purchases.
By planning and prioritizing, you can enjoy the holiday season without unnecessary financial stress.
This year’s holiday trends remind us that, even in a dynamic economic environment, the spirit of the season endures—adapted, but never diminished. With thoughtful spending and a positive economic backdrop, the 2024 holiday season holds the promise of joy and connection, reinforced by the resilience of consumers and the economy alike.