US holiday season spend likely to be up 3.2% YoY bar auto sales: MEI

The resilient 2023 economy was a story of positive surprises that buoyed the shopper. Consumers benefitted from strong income growth, allowing them to continue to spend and engage in the economy productively.

The 2023 consumer concentrated spending during promotional moments last holiday season, searching for–and receiving–discounts. As Christmas fell on a weekend, the institute observed some last-minute shopping and a rush of spending right into the holiday.

The 2024 holiday shopper will likely be using a similar playbook as last year, making choices and looking for the best deals, but may be feeling slightly more stretched, the institute concluded.

Job creation is still healthy but has cooled, due to a slowing in hiring rates. Layoff rates are quite low and the number of job openings still slightly exceeds the number of unemployed individuals.

While nominal wage growth has slowed, it remains above the pre-COVID average and above the underlying inflation rate for goods and services, which has also slowed.

The institute said inflation this holiday season will contribute much less to overall spending growth than it did in 2021 and 2022, reflecting the rebalancing of the economy from pandemic distortions.

Relative to last year, this year is a shorter holiday shopping season with Black Friday falling later in November than last year. There could be some volatility with year-over-year comparisons. It may also encourage retailers to start promotions earlier rather than concentrating them during the Black Friday weekend and it could push more holiday shopping into December, especially online.

The consumer continues to value making purchases anywhere at any time in this omni-channel world, which should drive activity during online promotional periods. The institute expects online spending, retail sales ex-autos, to grow by 7.1 per cent YoY during the holiday season.

Its SpendingPulse insights show an inclination for online spending on apparel: online sales account for a larger share of overall sales year-to-date relative to the same period last year. Based on those insights, SpendingPulse expects online apparel sales to increase by 4.5 per cent YoY and in-store by 2 per cent YoY this holiday season.

This deflationary trend for the holiday basket, combined with expected interest-rate reductions by the Federal Reserve that lower financing costs for big-ticket items, could narrow the gap between spending on goods and services, the institute added.

Fibre2Fashion News Desk (DS)