Americans may be down on the economy, but that’s not going to stop them from opening their wallets this holiday season.
That’s according to a BofA Securities’ holiday spending forecast which predicts a rise in Americans’ spending this year, bolstered by real wage growth that’s outpacing inflation — making goods relatively affordable for consumers. Consumers are expected to spend 7% more in 2024 than they did in 2023, to bring their average anticipated spend up to nearly $2,100, according to the forecast.
“A healthy labor market, inflation moving in the right direction, and real wage growth are all positive for the holiday season,” BofA Securities senior U.S. economist Stephen Juneau said on a press call this week.
A holiday retail forecast from consultancy Deloitte also anticipates higher consumer spending this year compared with last, with shoppers spending on experiences, plus home decor and party apparel. Deloitte expects consumers to spend an average of $1,778, up 8% from 2023, based on its survey of more than 4,000 U.S. consumers.
The National Retail Federation (NRF) also anticipates an uptick in consumer spending this year, but estimates that shoppers on average will spend a more modest $902 per person based on a consumer survey of more than 8,000 consumers conducted by Prosper Insights & Analytics.
Wages have outpaced inflation across income groups, according to Juneau, the BofA securities economist. Notably, the bottom 10th percentile of income earners have experienced the strongest weekly income growth when compared with 2019.
“Consumers are well set up going into the holiday season,” Juneau said.
Still, many shoppers — six in 10 — will try to offset rising prices by shopping at stores that offer discounts and deals, such as outlet malls, and big-box retailers, according to BofA Securities.
NRF data shows that younger generations of shoppers will even tap secondhand stores for gifts.
“While most consumers will opt to shop at traditional retailers this holiday season, many younger consumers between the ages of 18 to 24 will also head to thrift stores and resale shops,” Prosper Executive Vice President of Strategy Phil Rist said in a statement. “Secondhand and refurbished gifts appeal to this age group’s desire to save money and be more sustainable.”
When will people start shopping?
Retailers have started rolling out holiday-themed merchandise and holiday promotions earlier and earlier in recent years, in an effort to elongate the season and get a jump-start on sales.
That also means discounts and deals that were once reserved for Black Friday and Cyber Monday can go into effect as early as October. That’s especially true this year, as the window between Thanksgiving and Christmas is almost one week shorter compared with last, meaning that stores have even less time to clear merchandise from shelves and capture consumers’ dollars.
BofA Securities’ spending forecast shows that consumers are eager to start shopping early. Almost half of consumers say they plan to start buying on Black Friday, Cyber Monday, or earlier. Only 8% say they plan to wait until the last minute.