It’s a mixed bag when it comes to holiday spending this year — in some areas, costs are down while other things are more expensive, according to a recent Bankrate survey. Still, the holidays could overall be less costly for families this year compared to 2022.
The study shows things like fuel, airfare, TVs, and phones are down in cost from last year, while food prices tend to be higher, though they aren’t going up at rates that we have seen in months prior.
Still, experts are warning shoppers not to buy what they don't need and take the time to shop with savings in mind, especially with high interest rates.
One thing to keep in mind, according to experts: What you could get for $100 in 2020, you can get for $120 in 2023.
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The shoppers came out in droves during the post-Thanksgiving weekend.
Shoppers did shell out for the Black Friday weekend and through Cyber Monday; however, they spent less on average than they did back in 2019, according to initial data from the National Retail Federation.
“Is that more indicative of consumers being more price-sensitive?” one expert asked CNN. “Or, is it a sign that consumers are actually motivated to spend?”
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Americans pulling back their spending
Some Americans are spending like they’re living in a recession, even as optimism grows on Wall Street and among economists that the US economy will avoid a substantial downturn.
Discount retailers have warned throughout the year that customers are pulling back their spending in the face of economic uncertainty.
That’s shown up in the earnings of the most prominent retailers in the US. Companies including Macy’s and Costco, which are geared towards middle- and high-income shoppers, warned during the summer that consumers are trading down for some items and reshuffling their budgets to spend more on travel over goods.
Months later, the “revenge travel” boom is winding down. Consumers are still downsizing other parts of their spending. That’s starting to show up in economic data: US retail sales fell in October for the first time in seven months.
Even discount retailers have felt the bite of frugal shopping trends.
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What some companies have said in recent weeks about consumers:
Dollar Tree: The company has seen a boost from luring in new, higher-paying customers looking for bargains. Most of Dollar Tree’s new customers over the past year have household incomes totaling over $125,000, said Richard Dreiling, Dollar Tree chief executive, in a call with analysts last month.
But that hasn’t been enough to counter the broader trend of softening spending, particularly as seen among lower-income consumers.
“As lower-income consumers responded to the accumulated impact of inflation and reduced government benefits, we saw a notable pullback in spending, particularly in higher-margin discretionary categories,” said Dreiling.
Dollar General: The company expects to continue seeing softer spending from lower-income customers. The company earlier this year cut its outlook due to weakening demand.
“Our customer continues to tell us they are feeling significant pressure on their spending, which is supported by what we see in their behavior,” said Dollar General CEO Todd Vasos during the company’s third-quarter earnings call on Thursday. “We anticipate customer spending may continue to be constrained as we head into 2024.”
Walmart: The superstore chain has benefitted this year from a shift in spending that prioritizes food and necessities. But Walmart warned that consumer spending could weaken after the holiday shopping season as Americans’ credit card debt piles up and bank accounts drain.
“I look at this year, and it’s stronger than what I would’ve thought,” said CEO Doug McMillon in a CNBC interview that aired on Wednesday. “Next year is a different story. I don’t know what next year’s going to look like.”
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