October is the Unofficial Start of the Holiday Shopping Season
According to a recent report from Bankrate, half of shoppers plan to begin their holiday shopping by Halloween. Another study by RetailMeNot found that even more shoppers, up to 64%, are starting their holiday shopping in October, an increase from 53% in the previous year.
Early Estimates Point to a Strong Shopping Season
Deloitte’s annual forecast predicts that holiday retail sales will increase between 3.5% and 4.6% in 2023 due to more shoppers getting an early start on the season. Deloitte’s U.S. economic forecaster, Daniel Bachman, attributes this growth to healthy employment and income growth.
A research study from Morning Consult contradicts the belief that early shoppers are trying to save money. Instead, it found that early shoppers tend to splurge on their purchases.
Signs of a Shift in Consumer Spending
The National Retail Federation reports that consumers are still buying more than last year, but spending growth is slowing down as the economy stabilizes. Despite uncertainties like inflation, interest rates, and potential government shutdowns, moderate growth is expected to continue.
However, households may face challenges due to factors such as lower savings built up during the pandemic and rising credit costs.
Student Loan Payments Could Impact Wallets
Brett House, a professor at Columbia Business School, points out that student loan payments are a burden on consumers. Higher interest rates constrain household budgets while labor markets remain strong. Although there has been some cooling of inflation, another interest-rate increase is possible.
House emphasizes that employment status is the biggest factor affecting consumer spending, and with near full employment levels, consumer spending is expected to remain steady.
Concerns About the End of the Payment Pause
A survey by the National Endowment for Financial Education reveals that roughly half of borrowers are worried about the end of the payment pause for student loans. Many borrowers will have to make budgetary changes, with one in four adults reducing spending in other areas. This shift in consumer spending could impact the overall economy.
Hot Take: Early Holiday Shopping Trend Continues to Grow
The trend of starting holiday shopping early continues to gain momentum, with more shoppers planning to begin their purchases in October. This shift has led to optimistic predictions for a strong shopping season, with an expected increase in retail sales. However, there are signs of a slowdown in spending growth as the economy stabilizes and consumer concerns about student loan payments persist. As we approach the holiday season, it will be interesting to see how these factors shape consumer behavior and impact the overall economy.
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