Consumer spending has had a strong showing so far this holiday season. With the Thanksgiving five-day holiday period seeing a record 200.4 million consumers shopping, both online and in-store.
Furthermore, the National Retail Federation expects this year’s holiday season to reach record spending levels. Data released in early November predicted holiday spending levels in November and December to increase between 3-4 percent from last year.
But will this momentum continue?
Will They or Won’t They?
It’s likely that consumers will reconsider and rethink their spending habits as we enter a New Year.
“I don’t intend to buy any more than the usual, but with prices continuing to change, I just predict I’ll be spending more than I do now,” one interviewee said in an interview with Inc.
Some analysts are unsure if the strong spending during the holiday season will continue into 2024. In a Bloomberg article, Economists Tim Quinlan and Shannon Seery Grein shared that sentiment saying, “while today’s data [doesn’t] necessarily paint a picture of a consumer that is about to lose its footing, we still anticipate some moderation to take hold as the calendar flips to 2024.”
The U.S. Chamber of Commerce recently published an article on what to expect from the economy in 2024. In the article, Curtis Dubay – Chief Economist – describes how a smaller workforce in 2024 will define the economy.
Dubay also predicts the economy is likely to slow next year, because consumer spending is likely to slow. He credits that prediction due to consumers relying on the savings they saved up during the pandemic but have now dwindled and credit card balances have seen an uptick.
Additionally, the Chamber projects the economy to grow a mere 0.2 percent and 0.3 percent in the second and third quarters, respectively, next year. Take a look at the graph below to see how economy fared in the third quarter of this year, and the Chamber’s forecast for the fourth quarter this year, and into the next year.
Source: U.S. Chamber of Commerce
More Fun, Less Stuff
Spending money on experiences, like traveling, has increased this year. The U.S. Travel Association reported a 12 percent increase in air travel in July, compared to July of last year. Additionally, essential items (gas, food, baby supplies, etc.), will be a majority of consumers spending.
The willingness that consumers have to pay for material items, such as clothing, is not like it used to be. Furthermore, the price for resale or thrift items is expected to double in the coming years, reaching 82 billion dollars, per a census news release, the New York Times reported.
Online spending is expected to continue to increase. The Bank of America put together a survey with respondents in the U.S. being asked if they plan to spend more online throughout the next year. Of the 1,000 surveyed, 42 percent said yes. Convenience and quick delivery times remain a top reason for those choosing to purchase online.
Looking Ahead
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