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Consumers projected to spend record amount for the holidays

By Isabella Vesperini

Posted December 23, 2024

A generic photo of holiday decorations in a shopping mall.

People are shopping earlier; holiday décor and sales started as early as the beginning of November. (stevepb, Pixabay)

Consumers are spending record sums for the holidays this season, despite rising prices.

The National Retail Federation’s latest consumer survey projects consumers will spend $902 per person on gifts, food and decorations. People are spending $25 more than last year and $16 more than 2019’s record of $886 per person. The BofA Securities’ estimate is even higher; it predicts people will spend $2,100.

Helen Colby, assistant professor of marketing at the IU Kelley School of Business, said consumers may be more inclined to spend since inflation fell to 2.7 percent. People are more optimistic.

“There is, I think, some pent-up demand, because people last year and sort of the year before, really tightened their belts around the holidays,” she said. “And so, people are looking for sort of an outlet for that.”

Even if spending more, Colby said people are also focused on sales and online purchases. Approximately 70 percent of Americans shop online. The NRF projects that 57 percent of Americans will make their holiday purchases online.

“More than half of the people are doing the large majority of their shopping, or all of their shopping online,” Colby said, “Which has really pushed, I think, retailers to offer specific online pricing that sometimes hasn't always happened in previous years.”

Dana Olsen, senior lecturer in marketing at Kelley, said people are often spending on apparel, toys and beauty products. The NRF reports that 49 percent of Americans listed clothing and accessories as top wish list items this year.

“When you think of beauty and hair care, some of that stuff is really expensive, but some of it are these bundles or sets or travel items where you feel like you're getting a lot more for your money, and it's something that can be used over a prolonged period of time,” Olsen said. “Those are the things that, especially over the holiday season, have been really, really successful.”

People are also shopping earlier, Olsen said. Holiday décor and sales started as early as the beginning of November. About 45 percent of shoppers planned to buy holiday items even sooner; this is due to people wanting to spread out their budget, avoid the stress of last-minute shopping, and getting a head start on early deals.

“Retailers are capitalizing on getting this business earlier rather than later,” she said. “The one key thing about this year is that there's a week less between Thanksgiving and Christmas. And so, I think that's also kind of the urgency to get as many sales as you can earlier. And that sets the tone, I guess, for hitting that key Thanksgiving time period and even after that.”

Colby was surprised to see people spending record-breaking amounts of money for the holiday this year. Food prices increased five percent between 2022 and 2023.

“If you'd asked me six months ago, I would have predicted that holiday spend would be down, because people were still hurting from inflation, especially around food prices,” she said. “[But] I think it's a good sign, generally speaking, for the economy.”

Olsen thinks people are spending more now because prices are expected to continue to rise once President-elect Donald Trump imposes tariffs on foreign goods.

“If you want a good deal, now's the time to get it,” Olsen said. “…Even big purchases that we're seeing, people are deciding to go for it right now and not wait.”