U.S. consumers are out in force this holiday season, but enthusiasm and spending remain tempered by inflationary pressures that have eased, but not completely, after the COVID-19 pandemic.

After the sticker shock of the pandemic’s latter stages, a familiar frustration has set in that consumer prices remain high overall even as they have stopped rising rapidly.

Americans are “ready to open their wallets this holiday season,” the Conference Board said ahead of Black Friday – the day after Thanksgiving, which this year falls on November 28 – which traditionally sees US stores launch the Christmas shopping season with high prices. reductions.

“US consumers plan to spend more than last year, but inflation is narrowing the reach of their money.”

In this environment, no one expects to pay full price for items.

“Holiday shoppers will likely increase their budgets this year compared to last year, but will remain selective and look for discounts,” a note from Morgan Stanley said.

The investment bank’s survey found that 35% of respondents planned to spend more this holiday season. But nearly two-thirds of them would skip a purchase if an item wasn’t adequately discounted, meaning a price reduction of more than 20%.

“It’s going to be a good year, but I don’t think growth will be spectacular because consumers are still under pressure,” predicts Neil Saunders of GlobalData.

Inflation remains above the Federal Reserve’s (Fed) long-term target of 2%, reaching 2.6% annually in October, up from 2.4% in September. But this is significantly below the record level of 9.1% reached in June 2022.

Other recent economic data has been strong. Unemployment remains low at 4.1%, while preliminary gross domestic product (GDP) figures for the third quarter stand at 2.8%.

However, Biden’s presidency has coincided with a roughly 20% rise in consumer prices as COVID-19 pandemic lockdowns gave way to supply chain bottlenecks.

This inflation played a central role in the 2024 US presidential election, with Republican Donald Trump defeating Biden’s designated Democratic successor, Vice President Kamala Harris.

“Consumers still feel like things are pretty tough,” Saunders said. “So people are being very careful and careful with their spending.”

Price affected?

It remains to be seen how Trump’s impending presidency will affect inflation. Industry groups have warned that Republican-favored tariffs could reignite pricing pressures.

The National Retail Federation (NRF) predicted that a Trump tariff proposal floated during the campaign would cut American consumers’ budgets by up to $78 billion a year.

While possible harsh trade measures are already a concern among Washington trade groups, tariffs are not on consumers’ radars for the 2024 season, according to Saunders.

One of the challenges this year will be the shortness of the season.

Black Friday falls on November 29 at the latest, shortening the period between Thanksgiving and Christmas on December 25.

The impact of this dynamic on 2024 sales should not be overstated. In recent years, retailers have moved forward with the holiday shopping season, with some sellers launching online “Black Friday” promotions as early as October.

Among the companies that have already started offering discounts are big-box chains Walmart and Target, electronics giant Best Buy and home improvement retailer Home Depot.

Amazon officially launched “Black Friday Week” on Thursday.

The NRF projects vacation spending growth of between 2.5% and 3.5% during the 2024 season compared to the same period last year. up to $989 billion over a two-month period.

Economists at the trade group pointed to lower gasoline prices as a supporting factor.

Online sales are expected to grow up to 9% this season, continuing a long-term trend. Black Friday itself has become a big occasion for online shopping, with “Cyber ​​Monday” three days later.

“Over time, we went from a period where there was only Black Friday, and maybe a little bit of weekend, to a period of discounts that starts very early,” Saunders said. “These are seasonal discounts.”

There has been a decline in door-to-door sales, known to attract hordes of waiting crowds, sometimes resulting in injuries or worse.

Instead, a growing number of consumers are spreading out their purchases or choosing to click on Black Friday promotions at home.

The Sabah Daily News Bulletin

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