Americans will undergo 5-hour surgery or give up chocolate for the best holiday sale
Three in 10 Americans would undergo a five-hour surgery for the chance to save big on their holiday shopping, according to a new study from Zulily.
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Kelly Bergl has traditionally splurged during the holiday season, but the pandemic has accelerated that ritual.
She would buy chocolates at Harrods in London, lots of socks for her two young children, tickets to holiday events and decorations for her home.
“During the pandemic, our budget and time have increased,” said Bergl, 40, who lives in San Francisco, adding that her and her husband have been able to save money by not going out or traveling and that working from home has given them more time. Told.
Now they’re back in the office, on long business trips, and their coronavirus-related savings are dwindling. “I even have less time to think about” such purchases, she says.
On the other hand, they are being squeezed by inflation. Grocery shopping for his family costs about $300 a week, compared to less than $200 for him before the crisis.
So instead of buying a present for each member of your extended family of about 20 people as you normally would, you’ll be buying one present for each person that your relatives will randomly choose in the Secret Santa game.
“I find it easier to focus on the absolute necessities rather than the nice-to-haves,” she says.
Is personal consumption rising or falling?
Americans are becoming more cautious ahead of the crucial holiday season, facing higher prices, less savings and more debt. Consumer behavior research firm Circana says shoppers are still spending, but are focusing more on essentials and making fewer discretionary purchases.
“They’re saying, ‘We can’t keep spending like this,'” said Marshall Cohen, chief retail industry advisor at Circana.
That could make the holiday season, which officially begins this week on Black Friday and accounts for about a quarter of some retailers’ annual sales, even more difficult, he said. Cohen expects seasonal sales to be flat or slightly down this year.
General merchandise sales (meaning discretionary items such as clothing, televisions, computers, electronics and furniture) fell 7% year-on-year in October, the worst decline since March 2022, according to Circana data. It became a result.
Sales of essential goods such as food, beverages, and consumer packaged goods such as paper towels, garbage bags and aluminum foil have also declined, but are still up 1% annually.
Retail sales overall fell 0.1% last month after surging in the summer, according to the Census Bureau. Consumer sentiment fell for the fourth straight month in November, hitting its lowest level since May, according to a University of Michigan survey.
Will there be a recession?
Spending accounts for about 70% of economic activity, so consumer instability could increase the likelihood of a recession in the coming months. LinkedIn says the number of seasonal jobs posted on its site from July to October was cut in half from last year.
Jack Kleinhenz, chief economist at the National Retail Federation, disagrees that shoppers will be stressed this holiday season.
“Despite the pressures of still high inflation, difficult credit conditions and rising interest rates, the average household remains on relatively strong financial footing,” he says.
his group predicts holiday sale It is expected to rise between 3% and 4%, which is lower than the past two years but in line with the 2010-2019 average.
Cohen acknowledged that employment and wage growth has slowed but remains strong, and households are still benefiting from it.
“People are not afraid of losing their jobs,” he says.
How much excess household savings does the United States have?
But even as inflation eases, some households are being hit harder as pandemic-related savings dwindle, Cohen said. Mark Zandi, chief economist at Moody’s Analytics, estimates that the total cash reserves accumulated from federal economic stimulus and savings during the health crisis have increased to $1 trillion, up from a peak of $2.7 trillion. It has fallen to $750 billion.
However, Kleinhenz points out that recent government changes indicate that Americans are not drawing down their COVID-19 savings as rapidly as believed a few months ago.
Still, Ian Shepardson, chief economist at Pantheon Macroeconomics, said the cash cushion has shrunk to about $1.3 trillion, with most of it in the hands of the wealthy and less of it in the hands of low- and middle-income earners. They estimate that Americans have used up most of that cash.
Meanwhile, Americans are getting more into debt.
How serious is your credit card debt now?
Credit card debt soared by $154 billion in the third quarter, the largest increase since 1999, according to the New York Fed. Additionally, about 8% of credit card balances are at least 30 days past due, the highest since the early 2010s after the Great Recession.
Cohen said that during that recession, layoffs were widespread and consumers underwent a fundamental shift, shifting their shopping from department stores like Macy’s to discount stores like Walmart and Dollar General.
Now they’re making more subtle adjustments, but that could still dampen holiday sales. Cohen said a quarter of his seasonal sales come from impulse purchases, such as people buying hats or shoes for themselves after seeing an attractive display while shopping for a gift. Something like that. But only 23% of holiday shoppers plan to make such impulse purchases this year, down from 28% in 2022, Circana data shows.
And even after binge drinking during the coronavirus lockdown, there aren’t many things consumers are still craving, Cohen says. Rather, they are looking for value in the purchases they make at their discretion, he says.
“We don’t need another TV,” Cohen says. “The phone technology is still the same.”
“The motivation behind the purchase is really, ‘Is this going to add value to my life?'” Christina Hennington, Target’s chief growth officer, said on a recent earnings call, as recorded by Seeking Alpha. He spoke at “Does this feel interesting and relevant, is it trendy, or is it really for me?”
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Americans are bringing a similar mindset to gift-giving, Cohen said.
“Practical gifts, lifestyle gifts, and functional gifts take precedence over discretionary gifts,” he says.
Over the past few years, Mary von Tobel of O’Fallon, Illinois, has bought a new cell phone, an Apple computer and a refurbished sewing machine.
Right now, she and her husband are mostly limiting themselves to essentials and buying small holiday gifts. They want to downsize ahead of their planned move to Indiana in January, but they also don’t feel the need to splurge anymore.
“We have almost everything we need,” says von Tobel, 69.