U.S. consumers are gearing up to splurge over $1,000 on holiday gifts this season

In recent weeks, a Gallup poll revealed that Americans are preparing to spend significantly on holiday gifts this year, with many indicating an average spending of $1,000 or more. The poll's results, released on a Wednesday in November 2023, highlighted that this year's projected holiday spending has remained steady following a substantial increase in 2022, contrasting with the decline experienced in 2022 due to heightened inflation rates. In fact, the average spending estimate has not experienced the usual decrease typically seen as the holiday season progresses, suggesting a strong consumer confidence that has seemingly endured from October into November. The population segments notably planning to spend over $1,200 on gifts include upper-income Americans, parents with children under 18, and Republicans. Despite a slight majority, 55%, indicating their intention to spend approximately the same amount on gifts as in previous years, there remains a noteworthy proportion of individuals (23%) who anticipate spending less, in contrast to the 19% who plan to increase their holiday expenditures. Factors contributing to this elevated spending include inflation rates remaining below 3%, the resolution of uncertainty regarding the presidential race, and an overall improved economic outlook in the United States. These indicators reflect that parts of the consumer base are feeling more secure in their financial situations and are willing to invest actively in holiday gift-giving. This steadfastness in the anticipated holiday spending rate is seen as a positive sign for retailers, who have been facing challenges related to the prior high inflation environment. The anticipated higher-than-average increase in holiday sales – projected to be close to 5% – offers the retail sector a potential boost, essential for recovery after a challenging economic period. The impact of increased spending on consumer goods is likely to stimulate economic activity and support a robust fourth quarter for retailers as they strive to bounce back from previous years' difficulties. Overall, the sustained interest among consumers in holiday spending, specifically from targeted demographic groups, indicates a change in consumer behavior amidst an improving economic backdrop. The mood of consumers appears vibrant heading into the holiday season, setting the stage for a promising period for retailers aiming to maximize sales during the festivities.