{"id":12901,"date":"2023-12-27T14:55:52","date_gmt":"2023-12-27T14:55:52","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=12901"},"modified":"2024-01-10T17:20:31","modified_gmt":"2024-01-10T17:20:31","slug":"mitch-zacks-looks-at-this-years-holiday-spending-patterns","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/mitch-zacks-looks-at-this-years-holiday-spending-patterns\/","title":{"rendered":"Mitch Zacks Looks At This Year’s Holiday Spending Patterns"},"content":{"rendered":"\n

Abigail F. from Biloxi, MS asks:<\/em> Seasons Greetings Mitch, I\u2019m curious to hear how the shopping season has gone this year, and whether it\u2019s good or bad news for the market. Are Americans still out spending a bunch or are some cracks starting to show? I figure that these numbers are the most important ones to watch in the final days of the year. Thank you.<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thanks for writing, Abigail. I hope you\u2019re having a wonderful holiday season.<\/p>\n\n\n\n

The data suggest the U.S. consumer has been doing just fine over the past several weeks. In November, consumer spending surprised to the upside, with retail sales rising 0.3% from October. The consensus was that sales would decrease by -0.1%. These figures are not adjusted for inflation, but we know that CPI rose by 0.1% month-over-month in November, which tells us that we\u2019re seeing real spending growth here.1<\/sup><\/p>\n\n\n\n

And, zooming out over the past few years, the consumer has managed to keep up spending even after all the stimulus money from the pandemic faded. As seen in the chart below, the year-over-year change in spending remains solidly positive and running at levels slightly higher than pre-pandemic. Through November, retail sales have gone up 4.1% year-over-year, while CPI rose by 3.1%. Again, real spending growth.<\/p>\n\n\n\n

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Personal Consumption Expenditures, year-over-year % change<\/em><\/strong><\/p>\n\n\n\n

\"\"
Source: Federal Reserve Bank of St. Louis3<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n

One interesting point to make as well, when \u2018peering under the hood\u2019 of the spending data, is that spending on gas went down pretty significantly in November, due largely to lower gas prices. If you remove auto sales and gas sales from the headline spending number, retail sales rose by 0.6% last month. That\u2019s pretty strong.<\/p>\n\n\n\n

All told, Americans are expected to shell out close to $1 trillion this holiday season, which would mark the 15th consecutive year of growth. In fact, there\u2019s only been one year in the past two decades when spending fell year-over-year, and that was during the 2007-2008 Global Financial Crisis.<\/p>\n\n\n\n

There is one feature of the data I\u2019d like to call out, however, that is arguably bolstering the numbers this year versus what we may have seen in years past. And that\u2019s the new \u201cBuy Now, Pay Later\u201d option that has arguably expanded credit in the U.S. and is an option being used increasingly by younger households.<\/p>\n\n\n\n

According to a Bank of America survey, more than 40% of Gen Z and millennial households will go into debt to get through the holidays, with many opting for the buy now, pay later option. In many cases, these options provide an interest-free option for making a purchase, and a strong labor market supports a household\u2019s ability to make the payments. So, net-net, it\u2019s a positive. We just don\u2019t want to see too much reliance on credit generally speaking, which in a sense could undermine the strength we\u2019re seeing in the data.<\/p>\n\n\n\n

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The U.S. consumer has been driving the economy for quite a while, and this holiday season is no exception as Mitch explains in this week’s response. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-12901","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12901","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12901"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12901\/revisions"}],"predecessor-version":[{"id":12904,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12901\/revisions\/12904"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}