A recent Gallup poll found that U.S. consumers plan to spend upwards of $1,000 each on holiday gifts this year, signaling a potentially fruitful season for retailers.
What Happened: According to the poll, which was released on Wednesday, the average spending estimate for the holiday season has stayed steady since October, a departure from most years when the estimate typically decreases as the season advances.
The rise in November's holiday spending estimate this year follows a significant jump last year, in stark contrast to 2022 when planned spending declined due to high inflation.
Historically, holiday sales have seen a year-over-year increase, with an average growth of 4% since 2000, as per the National Retail Federation. Gallup's survey indicates that this year's holiday sales are likely to experience a higher-than-average increase, close to 5%.
Groups planning to spend the most on holiday gifts include upper-income Americans, parents with children under 18, and Republicans, all planning to spend over $1,200 on gifts.
A slight majority of Americans, 55%, say they will spend approximately the same on gifts, while a larger percentage say they will spend less (23%) rather than more (19%).
With inflation remaining below 3%, the presidential race uncertainty resolved, and an improved economic outlook for Americans, consumers seem prepared to spend a bit more than usual on holiday gifts.
The enthusiasm observed in October is largely persisting into November.
Why It Matters: The steady holiday spending estimate, despite the usual trend of a decrease as the season progresses, is a positive sign for retailers.
The potential increase in holiday sales, predicted to be near 5%, could provide a much-needed boost to the retail sector, which has been grappling with the impacts of high inflation.
Furthermore, the willingness of consumers to spend more than usual on holiday gifts, particularly among upper-income Americans, parents, and Republicans, could stimulate economic activity and contribute to a stronger fourth quarter for retailers.