Consumers Spent 3.8% More This Holiday Season Than Last

The Wall Street Journal also reported that customers were motivated by deals and promotions.

December 31, 2024

Inflation-weary consumers were projected to splurge this year on holiday gifts, food and decorations—fueled by online purchases, according to industry estimates, but the gains were increasingly driven by higher-income households (those making more than $100,000 a year), reported the Wall Street Journal.

Not every retailer has handled the turbulence well, wrote WSJ. “The Container Store and Party City chains both filed for bankruptcy protection in the days before Christmas. Meanwhile, the founding family of Nordstrom clinched a deal to take the struggling department store private.”

Overall, consumers spent 3.8% more from November 1 through December 24 than they did in the same period year over year, according to Mastercard SpendingPulse. The tally doesn’t include the week after Christmas, which is a key shopping period, according to WSJ.

“The gains were boosted by restaurant spending, which increased 6.3% in the period compared with last year. Online retail sales rose 6.7% year-over-year, while in-store sales increased 2.9%,” Wrote the WSJ. “This holiday season, we saw consumers motivated by deals and retailers respond with promotions to meet the demand,” said Steve Sadove, senior adviser for Mastercard and former CEO of Saks. Sadove noted to Reuters that the last five days of the holiday season accounted for 10% of all holiday spending, showing “a lot of strength in the end.

The median income across all U.S. households was around $81,000 in 2023, according to a recent Census Data report. It was about $55,000 for people 65 or older. Around 40% of American households earned at least $100,000 in 2023. 

“Our low-end customer is definitely pressured,” said Michael C. Creedon Jr., Dollar Tree’s chief executive in an earnings call. “We see that she is clearly focused on consumables.”

Sellers of many discretionary items lowered their prices this holiday season compared with last year to draw price-sensitive shoppers.

NACS Daily reported in November that shoppers were expected to spend $902 per person for the holidays, according to research from the National Retail Federation. The amount is about $25 per person more than last year’s amount and $16 higher than the previous record set in 2019.