Holiday Season: Consumer Headwinds Won’t Bring Out Scrooge
Consumers are all set to welcome the holidays with a positive attitude to spend.
“Over the holiday shopping season, which runs from Nov. 1 to Dec. 24, US retail sales excluding automotive are expected to rise by 3.7% from last year,”
as per a recent Mastercard SpendingPulse Survey.
This rise highlights that the spending for holidays is slowing around to those of the pre-pandemic level. In the previous year, holiday sales rose by 7.6%, while in 2019, the jump was 3.4%.
“It’s a bit of a return to a more normal environment because we have a more normal inflation environment,”
Michelle Meyer from the Mastercard Economics Institute said to Yahoo Finance.
“And even though we’re not totally back to normal, … inflation is still elevated for a number of categories. … It’s just much more contained than it was this time last year.”
The consumers are stepping into the vacation season while feeling the drag of high rates of interest, increasing gas prices, and repayment of student loans, along with other headwinds.
The price of gas is once again hurting the wallets of consumers. On Monday, the national average price for gasoline in the United States touched $3.88 each gallon, as per reports, though it still remains lower than what the prices were back in 2022 when gas was more than $4 per gallon.
“We have to keep a close eye on prices at the pump,” Meyer said. “Although gas prices are not a major concern yet,”
he further adds.
“They often have a direct impact on how Americans perceive their spending power and how they feel about the economy.”
Other headwinds that include households’ debt services and student loan payments are also under Meyer’s eyes.
Student loan repayment will be
“an adjustment for the economy but not a sudden or abrupt change in the economy,”
Meyer added.
“And when it comes to the impact of higher interest rates, households’ balance sheets are slightly less favorable than those of last year’s holiday shoppers,”
as per reports.
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