Consumers Increase Their Holiday Spending Intentions Mid-Season

WASHINGTON, D.C. -- The total amount Americans estimate they’ll spend on Christmas or other holiday gifts this year averages $975 in Gallup’s final 2023 reading, taken in November. This exceeds consumers’ holiday spending estimate from a year ago by more than $100 and is the highest in Gallup’s November measures historically since 1999.

Americans’ November forecast for their holiday gift spending has more than recovered from the $616 low recorded during the 2008 financial crisis when it had tumbled by $250 from the year prior. Since then, it has generally trended upward, although it was fairly steady near $850 for the past four years before surging well past that this year.

The latest figure, based on a poll conducted Nov. 1-23, is also higher than Americans’ average $923 spending prediction in October. This is only the fifth time in the 18 years since 2006 that Gallup has asked the holiday spending question in both October and November that the average amount has increased between the two months. More typically, consumers’ spending estimate declines as the season progresses.

Both the recent and year-over-year increases seen in consumers’ November holiday spending estimate run contrary to the implications of Americans’ continued pessimism about the economy and relatively sluggish overall spending in October, according to recent Commerce Department data.

However, the increase could reflect consumer interest in retailer promotions that kicked off ahead of Black Friday -- a day that, by some accounts, showed strong year-over-year growth in sales. Additionally, a recent analysis by the San Francisco Federal Reserve found consumers holding significant, albeit dwindling, “excess savings” -- meaning they have money to spend should they want to, or they likely feel somewhat confident about spending it.

Holiday Budget Increases Most Among Young and Middle-Income Shoppers

The large increase since last year in holiday shoppers’ November estimate of what they’ll spend is mainly explained by Americans in middle-income households. This group -- those with an annual household income between $40,000 and $99,999 -- plans to spend $947 this year, on average, up more than $200 from last year’s $709. By contrast, there has been minimal change in upper-income Americans’ already high estimate of over $1,400 and a slight decline in lower-income Americans’ estimate, slipping from $477 to $429.

Expected spending has also increased more among women (up by $137) than men (up $43) and far more among adults under age 35 (up $253) than middle-aged (up $73) and older adults (up $62). Still, middle-aged adults’ holiday spending remains the highest of all age groups, at $1,111, partly explained by the higher proportion of adults in this category who have children under 18. Overall, households with children plan to spend $1,306, compared with $835 among those in households without children.

Nearly Nine in 10 Americans Partake in Holiday Shopping

Altogether, the poll finds 88% of adults indicating they will participate in the shopping season to some degree. The majority, 58%, plan to spend at least $500 on gifts, including 37% who will spend $1,000 or more. Another 26% will spend between $100 and $499, while 4% will spend less than $100. Just 9% say they won’t spend anything, while another 4% don’t provide an answer.

Americans Slightly Less Conservative About Their Spending Pattern

The new poll also finds Americans slightly less conservative than they were a year ago in how they characterize their spending -- whether they will spend more, about the same or less money on gifts than in the year prior.

As is almost always the case, the highest percentage say they expect to spend about the same amount and more say they will spend “less” than “more.” However, slightly fewer people today (27%) than last year (33%) say they will spend “less.” At the same time, the 19% now saying they will spend more than they did a year ago is among the highest readings for this attitude in the trend since 1999.

Implications

Last year at this time, U.S. holiday retail sales seemed poised to increase by between about 4% and 6%, according to Gallup’s modeling comparing its holiday spending estimate trends with actual holiday retail sales for each year. In fact, average November-December 2022 retail sales (not including autos and gas) increased by 6.2%.

The same modeling procedure applied to Americans’ restrained spending estimate this October suggested holiday sales would increase by about 4% -- a relatively moderate rate of annual growth similar to the long-term average. Now, with consumers' spending estimate rising to $975, it appears year-over-year holiday sales could grow by somewhere between 6% and 9%.

This modeling has proven more accurate in some years than others, so the higher spending forecast is not something retailers can take to the bank. But the latest reading is a positive sign for retailers who may be counting on brisk holiday sales to make up for anemic receipts seen at the start of the fourth quarter.

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