Scrooge or Santa: Breaking Down Holiday Spending

The holidays are quickly approaching. For some, it is a time of joy and happiness shared with loved ones. For others, it is a period of stress and anxiety, sometimes even brought about by those loved ones. But no matter which side you sit on, it is certain that the holidays are full of spending.

According to the National Retail Federation, the average American spent around $875 on seasonal items in 2023. That number is expected to jump up to $904 in 2024, setting a new record. Gallup puts that number even higher at over $1,000 spent per person. These numbers may not be surprising with the great amount of consumer spending that takes place during the winter holiday season, but where people are shopping and for what reasons may be.

Santa Claus is Coming to Town

The big increase in holiday spending is not abnormal. It has been steadily increasing over the past few years, particularly after the Covid-19 pandemic. However, the rising spending this year could come from a multitude of different sources. According to Gallup, it is due to greater financial security as interest rates averaged around 3%. To the researchers at the NRF, it is instead a greater desire to shower loved ones with presents and gifts.

According to the National Retail Foundation, shoppers plan to spend around $640 of their $904 on gifts for friends, family, and coworkers. The rest is expected to go to holiday decorations, food, candy, and other holiday items. Given that 92% of American adults are expected to celebrate Christmas, Hanukkah, or Kwanzaa this year, the increase in spending makes sense.

I’ll Be Online For Christmas

Just like last year, the majority of consumers will be doing their holiday shopping online. Nearly 60% of US adults plan to do their shopping at an online retailer or a retailer’s online store. Department stores are the second top destination for holiday shopping, sitting significantly below online shopping at 46%. Other destinations include grocery stores, discount stores, small businesses, and craft stores.

Interestingly, there is expected to be a growth among young adults to go a more non-traditional route. 20% of adults aged 18-24 plan to do their holiday shopping at a thrift store, 8% more likely than the average American. Prosper Executive Vice President of Strategy Phil Rist believes this to be a product of Gen Z’s ideas about consumption and finances. “Many younger consumers between the ages of 18 to 24 will also head to thrift stores and resale shops,” he said. “Secondhand and refurbished gifts appeal to this age group’s desire to save money and be more sustainable.”

To All A Good Night

The holidays, like always, will be a busy time of year, apparently now more than ever. It’s no wonder that this time of year is known as the ‘golden quarter’ for retailers. For consumers though, it is important to always remember that massive spending isn’t required for a good, fun holiday. Regifted mementos, homemade presents, and experiences are usually much easier on your wallet, particularly in times of such great spending. Even more importantly, these types of gifts usually mean much more to the recipient. A personalized gift that you spent time crafting has much more sentimental value than a gift purchased at a big-box retailer. So if money is tight this Christmas, or you want to save some money for Hanukkah, don’t be afraid to show your loved ones you care with a little bit of homemade holiday cheer.