Inflation Casts a Shadow on Holiday Spending: A CNBC Survey Reveals Consumer Sentiment
This holiday season, the specter of inflation continues to haunt American consumers, dampening the enthusiasm for extravagant spending. A recent CNBC All-America Economic Survey reveals a mixed bag of holiday shopping plans, with a significant portion of respondents adjusting their budgets due to persistent price increases. While overall spending remains relatively consistent with previous years, the survey uncovers intriguing trends in consumer behavior, revealing who’s spending more, who’s cutting back, and where they’re choosing to shop amidst economic uncertainty. This detailed analysis dives into the key findings, highlighting both the challenges and opportunities presented by this year’s unique holiday shopping landscape.
Key Takeaways: A Glimpse into the 2024 Holiday Shopping Season
- Inflation’s Persistent Impact: The majority of Americans perceive higher prices this holiday season, significantly influencing spending decisions.
- Spending Stagnation: Overall holiday spending is expected to remain at an average level, with fewer consumers planning to increase spending compared to last year.
- Generational Divide: Younger Americans (18-34) are more likely to spend more, while older and lower-income individuals, along with women aged 18-49, are more inclined to reduce spending.
- Online Shopping Dominates: Online retailers are the preferred choice for most holiday shoppers, underlining the growing influence of e-commerce.
- Social Media’s Impact: Social media platforms play a significant role, impacting purchasing decisions through various ad formats and influencer marketing.
Inflation Remains a Major Concern
The CNBC All-America Economic Survey, conducted from December 5-8, 2024, polled 1,002 Americans nationwide. The survey highlights a striking 64% of respondents reporting higher holiday gift prices this year compared to last, with 34% characterizing the increase as “much higher.” This prevalent perception of inflation directly impacts spending patterns. Only 16% plan to spend more – down 2 percentage points from last year – while 48% plan to spend the same (up 5 points) and 35% plan to spend less (down 2 points). The average per-person spending is estimated at $1,014, a figure typical of recent years but notably lower than the outlier of $1,308 recorded in 2023.
Who’s Spending Less and Why?
The survey reveals that those most likely to curtail holiday spending include older Americans, lower-income individuals, and women aged 18 to 49. Inflation is the primary reason cited by 36% of these consumers, followed by reduced income (over 20%) and difficulty paying bills (20%). A significant 46% of Americans report entering the holiday season with debt, further contributing to their reduced spending plans. This underscores the pervasive financial strain felt by a significant portion of the population.
Who’s Spending More and Why?
Conversely, younger Americans (18-34), urban residents, and Latinos show a greater propensity to increase holiday spending. Among those spending more, 37% attribute it to higher incomes, while a surprising 25% cite higher prices, suggesting that some consumers are willing to spend more even with increased costs.
“Inflation is still really on people’s minds,” stated Jay Campbell, partner at Hart Research, the Democratic pollster for the survey. “To the degree inflation has an effect, it is a pushing down spending more than pushing up spending.” This observation points to the dominant influence of price perceptions on consumer behavior, despite some experiencing income growth.
A Shorter Shopping Season Adds to the Complexity
The 2024 holiday shopping season presents another unique challenge: Thanksgiving fell on November 28th, the latest possible date, resulting in a compressed timeframe. The survey shows that at the time of the poll, approximately half of Americans had completed less than half, or none, of their holiday shopping. A staggering one-third reported having done none at all. This late start to shopping is more pronounced among men (55% had done less than half) compared to women (40%). Interestingly, women over 50 appear to be the most organized, with 45% having finished more than half or all of their shopping. This procrastination isn’t entirely random; it appears to be a strategic move by some consumers.
Bargain Hunting and the “Game of Chicken”
The late shoppers are disproportionately likely to be men and lower-income individuals intending to spend less this year. This suggests a strategic waiting game, hoping for better deals as the season progresses. An annual “game of chicken” exists between retailers and consumers: retailers attempt to lure early shoppers with bargains, while some consumers wait, anticipating potential price improvements closer to the holidays.
Online Shopping Remains King
The survey highlights a clear preference for online shopping. 61% of respondents intend to conduct most or all of their holiday shopping online, with major players such as Amazon leading the way. Big-box stores attract 43%, while locally owned non-chain stores garner a smaller 26%. Wholesale retailers (like Costco) and department stores secured less than 20% each.
Demographic Differences in Online Shopping Habits
While online shopping preference shows little variation based on political affiliation or age group, a notable exception is the age group 65 and older who showed an 11-point less preference for online shopping. A substantially larger disparity is visible between income levels: wealthier Americans show a 25-point higher preference for online-only stores compared to their lower-income counterparts. This difference in tendency highlights the digital divide between different income brackets.
The Influence of Social Media Marketing
The power of social media in influencing purchasing decisions is also apparent. A significant **20% of respondents report buying directly from a site after seeing an advertised product on social media. Almost half of those who clicked on a regular product ad made a purchase. This suggests the vast influence of social media advertising and click through rates.** However, for 15%, the link came directly from a social media influencer. These influencer-influenced shoppers are typically younger, female, and lower-income, suggesting a focus on value and deals. This contrast with the higher-spending intentions of consumers who click through regular social media advertisements showcases the different marketing strategies’ effectiveness in different target demographics.
CPI Data Versus Consumer Perceptions
The November Consumer Price Index (CPI) data presented a somewhat contrasting picture. While the CPI rose 2.7% year-over-year (four-tenths of a point less than last year), with goods prices even dropping by 0.6%, the survey reveals that consumer perceptions of inflation remain significantly high. This discrepancy could be rooted not only in the rate of inflation but also in the overall price levels, which saw sharp increases during the pandemic and lingered at elevated levels afterward. In essence, while the CPI indicates a slight improvement, ordinary Americans remain focused on maintaining the real value of their spending power and are highly sensitive to what feels like high prices, regardless of the official inflation rate.
The complete CNBC All-America Economic Survey can be accessed online.
