This year has been filled with retail cheer. While some economists are skeptical on the future uptick of our economy, this holiday season shows that more people are traveling and more people are spending.
Consumers are expected to spend an average of $1,500 per household on gifts this year, according to Deloitte’s annual retail survey; and some people spend much, much more. This average spend is about 5% higher than last year for a projected total of $1.1 trillion during the retail industry’s most lucrative season. The largest slice comes from “high spenders,” contributing to 60% of the pie with an average contribution of over $2,100.
Because the numbers are ever in our favor right now, and consumer spending is driving us straight through our 11th consecutive year without a recession, the holiday has been very merry and bright, and holiday cheer is off the charts. We can attribute the success of the season to very low unemployment rates (hovering right around 3.5%) and increased real disposable income levels that rose in June of this year.
MarketWatch reports that consumers have been the main driving force behind keeping the economy out of a recession, accounting for nearly 80% of the economy’s growth. The report also notes that the other 20% is primarily generated from government spending and very little is produced by business spending.
Businesses big and small are having to compete with retail dollars, as consumers keep “product, price, and convenience” top of mind when shopping for that perfect gift. In today’s technology-driven environment, Deliotte’s retail report predicts that e-commerce holiday sales will grow between 14%-18% because of the convenience-minded consumer and how easy it has become to purchase, pay, and ship something with the click of a button. Consumers also value free shipping over paying for faster shipping. While Amazon is one of the most popular in the online retail space, Walmart takes the gold as the top global corporation, with Costco coming in with the silver.
This year, we’re lucky to have all of the holiday celebrations fall in the same week, which can be a rare occurrence because the holidays run off of different calendars. Hanukkah started on Sunday evening, with Christmas taking place on Wednesday, followed by the beginning of Kwanka on Thursday. With the overlap of celebrations, AAA reports that nearly 115.6 million holiday goers will travel between Saturday, Dec. 21 through Wednesday, Jan. 1, with over 104 million going by car. This is an increase of 3.9% over last year. AAA also reports that air travel is up 4.9%—the biggest increase since 2003—for a total of almost 7 million people taking to the sky.
No matter what your traditions or how you choose to celebrate, we hope that your holidays are surrounded by friends and family in a room filled with laughter and everything you hoped for this time of year. Wishing you and yours a very happy holiday season!
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About Stu: With more than 30 years of experience as a tax professional, Stu Steinberg brings a broad depth of knowledge to his work with his clients. Stu founded Erock Tax to help provide tax and financial planning strategies to individuals, families and small businesses and is passionate about empowering his clients through education about their money health. Stu is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.