It’s the most wonderful time of the year yet again, when we make our lists (and check them twice) and then try to get our finances in order to make sure we’re not paying for the holiday shopping season come January 2020 in credit card debt.
And it’s the aspect of getting finances in order and holiday spending that can actually be just as foretelling for the near-term future of the economy as it can be for individuals’ personal financial situations. What’s more is that tracking overall holiday spending this year could be arguably more important now as opposed to recent years. Just consider the ebbs and flows we’ve seen in the stock market in 2019, predictions about when an economic recession might take effect, the tit-for-tat in the trade situation with China and more.
Bottom line: If you want to take the temperature of the near-term economy as we end 2019 and move into 2020, look no further than the overall holiday spending numbers to tell you how confident — or lack thereof — consumers truly are about the nation’s economic future. Let’s take a look at what the experts are predicting, and how that might serve as a preview of things to come.
Predictions on 2019 Holiday Spending
American consumers are predicted to spend about $1.1 trillion total this holiday season, or an average of more than $1,500 per household. That’s projected to be about a 4 percent increase from what they spent last year, when the average was a hair more than $1,000 per household, or about $707 billion total.
While 2018’s total spending was down from its projected estimate of about $730 billion, it still represented about a 3 percent growth in spending from the year prior. To note that the expected overall spending is expected to top $1 trillion this year is significant, especially when you consider that many Federal Reserve standards have indicated that there hasn’t been any significant economic growth in the latter part of this year. It’s largely why the Fed has cut interest rates recently. What was spent on Black Friday and Cyber Monday could tell us a lot about consumer confidence in America right now.
Why 2019 Holiday Spending Matters
Spending between November 1 and December 31 represents about 20 percent of the annual retail sales each year. What is spent also represents the current financial situation of Americans and how they’re feeling as we move into a new calendar year. Lots of things factor into spending, such as jobs — of which the October jobs report was better than expected — and consumer confidence, which is expected to increase when the November report is released.
So, why is holiday spending important? Simply put, spending has a trickle down effect on all other aspects of the economy. If Americans are spending less on Christmas and holiday gifts, it likely indicates that they’re likely to cut back on fringe purchases moving forward, like dining out, as well as big purchases like homes and vehicles. And any reduction in spending is going to impact how much growth there is when it comes to job creation or, even worse, job reduction. You can see why healthy spending is key to a healthy economy moving forward. In a way, we’re all in this together.
The good news is that American consumers have remained incredibly resilient this year, even as the stock market has been on a bit of a roller coaster at times, the trade war with China has meant increased tariffs and as impeachment has become the buzzword around the nation’s capital.
There’s reason to believe that spending will hit, or even exceed, that $1.1 trillion mark that is predicted this year with holiday spending. If it doesn’t, then it could be time to pause and approach 2020 with a little more concern than we’ve entered past new years in.