With the end of the Christmas holiday, this year’s “holiday shopping season” in the United States has also come to an end. There are various signs that many American consumers are becoming more cautious during this holiday season. Some shoppers are waiting until the last moment of major sales events and are still looking for cheaper Christmas products.

According to the Mastercard SpendingPulse report, which measures offline store and online sales, U.S. retail sales grew only 3.1% between November 1 and December 24 this year. This growth figure is lower than the 3.7% Mastercard forecast in September and significantly lower than last year's 7.6% growth, which indicates that rising interest rates and inflation are putting pressure on consumer spending.


SpendingPulse's estimates measure offline and online retail sales across all payment forms (excluding auto and travel purchases) and are not adjusted for inflation. Retailers get the bulk of their holiday sales during this period.

Michelle Meyer, chief economist at Mastercard Economics, said, "Consumers are spending in a cautious manner during this year's holiday shopping season. (However) the economic background remains favorable, creating healthy jobs and easing inflationary pressures, allowing consumers to seek the goods and experiences they value most."

One of the hallmarks of this holiday shopping season is that after relatively busy Thanksgiving and Black Friday weekends, many consumers are waiting until the last minute before Christmas to shop again, expecting further price drops and, this year, a full weekend before Christmas.

Some analysts estimate that last Saturday (December 23) was the biggest sales day of the year, surpassing Black Friday.

Marshal Cohen, chief retail consultant at Circana, said, "If they are not particularly worried about supply or afraid of missing out on purchases, they (consumers) have no reason to spend early."

According to data from SpendingPulse, between November 1 and December 24 this year, online retail sales increased by 6.3% year-on-year, and offline store sales increased by 2.2%. Sales of electronics and jewelry declined year-over-year during the period. The strongest growth has been in the restaurant industry, as people eat out, driving up restaurant prices.

Even as the Federal Reserve pushes interest rates to the highest level in more than two decades, strong consumption, especially in travel and dining, is still injecting vitality into the U.S. economy in 2023. However, consumption has slowed in some categories, especially home appliances and electronics, after many households splurged during the pandemic.

Unable to hide worries

Many U.S. retailers have mixed interpretations of their business conditions during the critical holiday shopping period. Sales at some businesses have remained steady, while others have warned people are cutting back on spending.

Although the U.S. job market remains strong, many consumers have saved significantly less than during the epidemic and are facing a sharp rise in credit card borrowing costs. Millions of U.S. students have also resumed their monthly student loan payments.

Nike and FedEx released their latest quarterly earnings just days before Christmas, and investors were able to draw some cautious signals. Both companies cut their revenue forecasts, disappointing investors and sending their stock prices plummeting.

Nike Chief Financial Officer Matt Friend said on Thursday that demand for Nike sneakers and apparel was weak outside of promotions such as Black Friday. He also noted that traffic on the company's e-commerce platform has decreased while competitors have offered stronger promotions.

FedEx CEO Raj Subramaniam pointed out, "Consumers' spending mix on goods and services is close to pre-epidemic levels. The destocking phase has ended, but the restocking phase has not really begun."

In order to avoid being stuck with excess inventory, many retailers have begun offering Black Friday discounts well in advance of this shopping season. Amazon holds its Prime Day sale in October, and major chains like Walmart and Target have launched Black Friday deals weeks in advance.

Circana data shows that as of December 16, unit sales of daily necessities fell 6% compared with the same period last year. Some categories remain holiday staples: Top-selling children's products include toy construction sets and stuffed toys. For adults, the top sellers are beauty products and on-the-go beverages.

It is worth mentioning that this year there are a total of 31 days from "Black Friday" to Christmas Eve, which is one of the longest holiday shopping seasons.

Craig Johnson, president of research firm Customer Growth Partners, said some people may think this is good for business because it expands the sales window. But from another perspective, this will cause a deserted period during the non-holiday period in December. The longer the sales season, the longer the cooling off period.

The week after Christmas has become increasingly important to U.S. retailers as consumers tend to visit stores to return items or seek deeper discounts. Some chains start advertising their post-Christmas sales well before Christmas Eve. Macy’s mailed out a promotional flyer the week before Christmas, advertising discounts of 20% to 60% on clothing, accessories and home furnishings when purchased online on December 25 and in-store from December 26 to January 2.

The National Retail Federation previously predicted that holiday sales will increase by 6% to 8% from November 1 to December 31, reaching between US$942.6 billion and US$960.4 billion. These figures do not include spending at car dealerships, gas stations and restaurants. The industry group is expected to update sales statistics for this shopping season in January.