BofA Forecasts Holiday Spending Surge with 7% Increase, Aiming for Nearly $2,100 Average per Consumer
Americans are expected to increase holiday spending in 2024 due to real wage growth outpacing inflation, according to forecasts.
Major U.S. retailers are gearing up for a bustling holiday season, with a positive outlook for consumer spending despite economic uncertainties. A recent forecast by BofA Securities predicts a 7% increase in holiday spending this year, reaching an average of nearly $2,100 per person. The forecast attributes this growth to real wage growth outpacing inflation, making goods more affordable for consumers.
Consumer Sentiment and Economic Factors
The holiday retail forecast from consultancy Deloitte also aligns with BofA's prediction, projecting an 8% increase in consumer spending compared to last year, with an average spend of $1,778 per person. This growth is expected to be driven by consumers spending on experiences, home decor, and party apparel.
Spending Outlook and Factors Influencing Consumer Behavior
The National Retail Federation (NRF) expects a modest increase in consumer spending, estimating an average of $902 per person based on a survey of over 8,000 consumers. However, it's important to note that while overall consumer spending is expected to rise, many shoppers are still mindful of rising prices and will seek out discounts and deals. BofA Securities found that 60% of shoppers plan to shop at discount stores and big-box retailers to offset rising prices.
Impact of Younger Generations
Interestingly, younger generations, particularly those aged 18 to 24, are also embracing secondhand and refurbished gifts as a way to save money while being more sustainable. This highlights a shift in consumer behavior, with a growing emphasis on both affordability and environmental consciousness.
Early Holiday Shopping Trends
Retailers have been extending the holiday season by introducing holiday-themed merchandise and promotions earlier than ever. This year, the gap between Thanksgiving and Christmas is almost one week shorter, prompting retailers to implement discounts and deals earlier, potentially as early as October. Over half of consumers plan to start their holiday shopping on Black Friday, Cyber Monday, or even earlier, indicating a shift towards early holiday shopping.
Outlook for the 2024 Holiday Season
With various economic factors and changing consumer behaviors, the outlook for the 2024 holiday season appears promising. Retailers can expect increased consumer spending, driven by real wage growth, an expanding customer base that is willing to explore discount and secondhand options, as well as the trend of early holiday shopping.
As consumers navigate through the holiday shopping season, the intersection of economic factors, changing spending behaviors, and the impact of various generational priorities will shape the landscape. Retailers are likely to adapt their strategies to align with these trends and meet the evolving demands of shoppers.
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