Advisor Voices

Advisor Voices: Consumer Spending making the Holidays Bright

12 December 2019

By: Rob Young, CFA®, Strategy & Analytics Specialist

'Tis the season for celebration, gatherings and the ringing of cash registers! By the end of 2019’s holiday season, U.S. consumers will have spent approximately $730 billion with an average holiday-shopping of just over $1,000 per person.[1]

Top gift categories

Survey data from the National Retail Association shows top categories for gift-giving include:

Clothing and accessories: 58%
Gift cards: 54%
Toys: 39%
Books/music/movies/video games: 37%
Food/candy: 32%

Young adults

Young people aged 18-24 particularly appreciate the social aspect of holiday shopping, with 88% of that group reporting they planned to shop over Thanksgiving weekend, according to a survey by the National Retail Association. And it’s not all online shopping for the young crowd: just over half of them say they’ll begin their holiday shopping by visiting brick and mortar stores.

It’s not just about the spending . . .the holidays can bring seasonal jobs

Seasonal hiring is vital for retail and delivery businesses, with approximately 600,000 seasonal positions filled each year. However, there’s been a downward trend in the number of purely seasonal hires over the last seven years, according to the U.S. Bureau of Labor Statistics.

Seasonal employment buildups in retail trade, 2010-19 (not seasonally adjusted)
Source: U.S. Bureau of Labor Statistics

Impact of a late Thanksgiving

This year Thanksgiving was unusually late in November, leaving just 26 days between Thanksgiving and Christmas. In past decades, that might have pinched retailers, but the National Retail Foundation doesn’t expect a significant impact due to consumers’ shift to starting their shopping far earlier. In fact, the NRF defines the holiday shopping season as November 1 through December 31.[2]

Stock market volatility

Christmas Eve of 2018 was a relatively bah-humbug way to head into the end the year.  Other years prove brighter as stock-market volatility during December is roughly average—not as high as volatile October nor as low as the quieter summer months.

The chart below shows the Volatility S&P 500 Index (VIX) in 2018.

Source: Bloomberg

The confidence of the U.S. consumer is playing a large role in health of the overall economy.  And, holiday spending represents just one category of spending that hopefully will add fuel for a strong finish to the year. 

[1] National Retail Foundation: https://nrf.com/media-center/press-releases/half-holiday-shoppers-have-already-started
[2] National Retail Foundation: https://nrf.com/media-center/press-releases/half-holiday-shoppers-have-already-started
Chicago Board Options Exchange Volatility Index (VIX) is a calculation designed to produce a measure of constant, 20 day expected volatility of the US stock market, derived from real-time, mid-quote prices of S& P 500 Index (SPX) call & put options.
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