Tis the Season: How Politics, Weather, and Consumer Sentiment Shape Holiday Spending

As the holiday season approaches, shoppers across the United States gear up for a whirlwind of spending, fueled by a mixture of optimism, caution, and a dash of unpredictability. According to the National Retail Federation (NRF), holiday spending in November and December is projected to rise between 2.5% and 3.5%, totaling an impressive $979.5 billion to $989 billion. Despite various factors at play, a deal-hunting mentality is set to define this seasonal shopping spree.

Holiday Window Displays Eye-catching holiday display in a bustling city

A recent Deloitte survey reveals that consumers anticipate spending an average of $1,778 this season, marking an 8% increase from 2023. While this uptick suggests a healthy consumer sentiment, there are underlying currents that could affect where those dollars are directed.

Challenges and Opportunities in 2024

Even though inflation seems to be leveling off, retailers face various challenges. Factors such as unpredictable weather patterns, the looming presidential election, and an evolving consumer focus on experiences over traditional gift-giving will inevitably shape shopping habits this year. Stephen Rogers, managing director at Deloitte’s Consumer Industry Center, views the mood positively despite the political backdrop, stating,

“People are still in a better frame of mind, despite the political chatter.”

Nearly 80% of surveyed shoppers indicate plans to participate in sales events during October and November, a significant increase from the previous year’s 61%.

Shopping Ahead of Black Friday Shoppers prepping for Black Friday deals at local Walmart

In an intriguing twist, consumers appear to be more inclined toward splurging on home decorations and experiences rather than on gifts, with spending on experiences expected to rise by a striking 16%. Conversely, spending on gifts is anticipated to dip by about 3% compared to last year. Retailers, hence, may need to reevaluate their strategies to align with this shifting focus.

Election Year Dynamics

As shoppers await the outcome of the presidential election set for November 5, concerns arise regarding how political events might divert shoppers’ attention away from purchases. This uncertainty can dampen retail prospects, with many worried that critical news cycles will overshadow shopping initiatives.

After Hurricane Milton Devastating impact of Hurricane Milton on Florida residents

Another unexpected factor that could shift consumer priorities is Hurricane Milton, which has wrought extensive damage across parts of Florida. With ongoing search and rescue operations in affected areas like Clearwater, many residents might redirect their holiday budgets toward urgent repairs and essentials.

The Calendar Conundrum

Retailers also have to contend with a wrinkle in the calendar this year, as there are five fewer days between Thanksgiving and Christmas. This condensed shopping window may create heightened urgency among consumers, pushing them to make quicker purchasing decisions.

In response to this evolving shopping landscape, Kohl’s plans to diversify its offerings, focusing on a broader variety of gift items as well as festive attire and decorations aimed at appealing to lower- and middle-income shoppers.

As household budgets get reshuffled this holiday season amid diverse pressures, it remains to be seen how shoppers will adapt their spending habits. Will they go gnome with their holiday expenditures or seek out the quintessential yard decor? Only time will tell as we inch closer to the festivities.