Preliminary data suggest that holiday spending at brick-and-mortar stores is rather mellow, in part because shoppers already found a lot of the deals they wanted in earlier fall sales. But we are spending record amounts online, with Black Friday posting $9.8 billion in online sales, up 7.5% from last year. And consumer spending has been stronger than predicted throughout this year.
…When I was making markets (1978-1990) at the Chicago Board Options Exchange, my competitors and I on the trading floor typically shrugged off sentiment numbers when they were reported. They were considered pretty much irrelevant as reads for the state or direction of the economy.
It was behavior numbers that mattered, and one of the most reliable set of numbers were those that produced hard evidence of where and how much consumers were actually spending [John Tsitrian, “So Far Consumers Are Defying GOP Gloom-and-Doom About the Economy. Holiday Shoppers Are Buying Like Crazy,” South Dakota Standard, 2023.11.27].
Part of me still wants to contend that we’d all be better off if we all bought a lot less stuff, but as we know quite vividly from the scary pre-stimulus days of the pandemic, everyone getting off the “Consume, Citizen!” treadmill at once will crash the economy. One reason Tsitrian says shoppers will still outspend their bad vibes is lower personal debt:
Here are some findings from a Northwestern Mutual Life/Harris Poll study conducted last Spring and published last August: On average, Americans are in substantially less personal debt (debt that does not include mortgages) than they were in 2022. In fact, average personal debt this year is $8,000 lower than it was in 2019.
This is why, as I noted earlier, the NRF says that “overall household finances remain in good shape and will continue to support the consumer’s ability to spend” [Tsitrian, 2023.11.27].