The retail holiday season has already begun, and in the next weeks, we will find out if consumers are as pessimistic about the state of the economy as they claimed to be before the election. (A Gallup poll conducted in October revealed that slightly more than half of Americans believe their current situation is worse than it was four years ago.)Relevant ArticlesBusiness | Opinion: By neglecting to preserve our data, Big Tech violated customer confidence.Business | Jill On Money: The response of the market to Trump 2.0Business | Following the election, the economy is still thriving.Get your complimentary weekly credit report as a business or consumer tip.Business | Jill On Money: Enrollment in Health Care for 2025
With Deloitte projecting an increase of 2.3 to 3.3 percent from a year ago, early projections point to a mediocre holiday spending season. This would be a decline from last year’s 4.3% annual gain. According to Adobe, e-commerce is expected to grow at a higher rate (7-9%) than brick and mortar sales, and it is likely to set yet another record in 2024 ($240.8 billion).
Major retailers’ recruiting strategies may provide a hint about the holidays in 2024. Seasonal hiring is expected to create 520,000 new jobs, according to outplacement company Challenger, Gray & Christmas. This is less than the 564,000 new jobs created last year and the second-lowest number since 2009.
Nevertheless, Target, which just revealed shocking profits, will add about 100,000 seasonal team members to its ranks across our stores and supply chain facilities, while Amazon said that it is adding 250,000 full-time, part-time, and seasonal positions.
However, it’s telling that Walmart, the big kahuna that crushed profit forecasts, stated that it would only hire 40,000 seasonal workers. The fact that many Americans are still suffering from the COVID-19 inflation surge and associated corresponding high interest rates may signify a broader fear among businesses, both large and small, that they may not be able to spend as freely as they would want.
Yes, everyone is happy that prices have decreased dramatically over the last two years, but many people are still having to deal with high costs for everything from child care to insurance to rent. Data supports this lived experience: the Consumer Price Index (CPI) has increased by 22.9% in the last five years, nearly tripling the speed of the preceding five-year period.
However, the American customer should not be overlooked! We detest high prices, and the Thanksgiving meal this year is more expensive than it was in 2020 (go for the frozen peas instead of the cranberries), but many workers have seen wage increases, which has lessened the impact of high prices to some extent.
Furthermore, the value of their homes and retirement savings has increased the net worth of many Baby Boomers, including those who are retired. According to strategist Ed Yardeni, this cohort is largely content now that their mortgages have been paid off, their college tuition has been completed, and their asset prices have increased.
The bottom line: Despite our collective complaints about high costs, a sizable portion of the populace has been spending, which has fueled economic expansion during this exceptional time of high prices and high interest rates.
The economy as a whole might benefit if enough people continue to spend during the 2024 holiday season.
I stated last year that consumers are the key to determining whether or not a recession is imminent in 2024 when I wrote about the 2023 holiday season. Since there is now little indication that consumers are retrenching and rolling over, the much-anticipated soft landing might actually happen.
At least for the time being, it is safe to assume that 2024 will confirm the much-desired smooth landing. With a new administration joining the battle, the future is a little unclear.
The policies implemented in the upcoming months will determine the economy’s future course.
Business analyst Jill Schlesinger, CFP, works for CBS News. Her email address is [email protected]. She is a former options trader and the CIO of an investment advising firm. Visit www.jillonmoney.com, her website.
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