As the holiday season approaches, consumers in the U.S. are planning to tighten their budgets compared to previous years. Various factors, including inflation and economic conditions, are influencing these spending decisions. The latest Holiday Spending Survey indicates a noticeable shift in consumer behavior, signaling a broader economic impact on personal finances.
A review of past reports shows consistency in certain spending habits despite evolving economic circumstances. Online shopping continues to be a popular choice, with about 43% of shoppers planning to make at least half of their gift purchases through online platforms. Trends also reveal a change in the types of products that are gaining or losing popularity among holiday shoppers.
How is Holiday Spending Changing?
The Conference Board’s recent survey highlights a planned decrease in holiday spending, with consumers budgeting around $990, a 6.9% decrease from the previous year. Both gift and non-gift expenditures have seen reductions, bringing them to multiyear lows once inflation adjustments are made. These findings suggest a cautious approach to holiday shopping this year.
What Products Are in Demand?
According to the survey data, there is increased interest in toys, games, travel packages, and gift cards, while books, music, DVDs, and tools are less favored compared to last year. This shift in consumer preference reflects changes in how people choose to allocate their limited resources. Moreover, the focus on finding value-for-money deals continues to impact these buying trends.
In a statement, Stephanie Guichard, Senior Economist of Global Indicators at The Conference Board, commented on the impact of inflation:
“Several years of relatively high inflation have raised price levels and squeezed consumers’ wallets.”
Such price increases are directly affecting consumers’ willingness to spend during the holiday season.
Younger and wealthier individuals are reducing their holiday expenditures more than other demographic groups. In contrast, consumers over the age of 65 and households earning less than $50,000 show intentions to slightly increase their spending. This suggests varying levels of economic resilience and prioritization among different groups.
The planned travel expenditures also indicate a cautious outlook, with only 30% choosing to travel during the festivities. This trend is slightly lower than in the past, suggesting a preference to stay local or at home during the holidays.
Tariffs on imported goods have added another layer of complexity to consumer decisions, with many opting to buy fewer items or seek discounts to counteract price surges. Guichard also noted:
“Many consumers intend to either buy fewer items or seek out discounts if prices are inflated by tariffs.”
This emphasizes the heightened price sensitivity among shoppers.
Overall, this year’s holiday spending patterns underscore the broader economic challenges consumers are facing. Understanding these dynamics can help individuals make informed decisions regarding budget allocations and purchasing priorities. Tracking these trends offers valuable insights into the economic landscape’s evolving impact on consumer behavior.
