Americans won’t go crazy with holiday gifts this year

You can blame inflation for families taking friends, co-workers, and extended families off your holiday gift lists this year.

Ongoing inflation – 8.5% higher consumer prices in July than a year ago – has reshaped the way we budget for everyday necessities and the occasional indulgence. Prices are rising for everything from groceries to clothes, shoes, stationery, and more.
It also forced many families to tap into their savings or accumulate more credit card debt just to keep up with the rising cost of living. Over the past year, credit card debt has jumped $100 billion, or 13%, the largest percentage increase in more than 20 years.

What does all this mean for the upcoming 2022 holiday shopping season? less. Much less.

According to new forecasts from consultancy Deloitte, this will be a stark contrast to last year’s strong holiday performance.

It expects retail sales for the key year-end gift buying months in November, December and January (when Christmas gift cards are redeemed) to increase 4% to 6%.

This compares with a solid 15.1% increase for the same time frame last year, but the slower growth projected for this year is in line with the trend in holiday retail sales before the pandemic.

The expected sharp decline from last year “reflects the slowdown in the economy,” Daniel Bachmann, US economic forecasts expert at Deloitte, said in a report. “Retail sales are likely to be further affected by lower demand for consumer durables, which has been the cornerstone of spending in the pandemic.”

Andrew Furman, associate professor, said the 15% growth in holiday shopping last season was largely due to “the unfamiliar circumstances surrounding the pandemic, namely the shift to spending on ‘things rather than the expertise and extra money that stimulus checks provide'” Marketing at the Frank Zarb School of Business at Hofstra University.

“This year’s shopping season is likely to be challenging for retailers,” he said.

smaller gifts

Among the gift categories that are still expected to do well this year are clothing, toys, and gift cards. Rod Sides, vice president at Deloitte and head of US retail and distribution practices, said spending in restaurants, entertainment and travel should also rise.

“Overall, there will still be sales growth, but it won’t be as dramatic as last year,” Sides said. “If there are fewer gift purchases by consumers, expect to see more holiday promotions than ever before.”

Separately, the company expects online vacation spending to increase 12.8% to 14.3% in 2022, outpacing last year’s 8.4% jump.

Inflation won’t be the Grinch that totally stole Christmas, according to Neil Saunders, retail analyst and managing director at GlobalData Retail. But he said any modest growth in sales that is largely driven by inflation and sales volume would be flat to negative across most categories.

“Giving will remain an important part of the holidays, but consumers will be more economical and practical in their spending on gifts. This means less gifting to non-family members such as colleagues or friends, so gifting circles will shrink,” he said.

If consumers were planning for fewer gifts, Saunders said, they would probably try to make them more meaningful.

“They will make sure they are desirable things and not just wastes of money. The gifts will be practical, including gifting cash and gift cards so recipients can choose exactly what they want,” he said.

One area where there wouldn’t be a lot of cuts? gifts for kids. “Parents are always keen to do everything they can to ensure the kids have a great vacation,” Saunders said.

CNN’s Matt Egan contributed to this story.

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