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This article was written on Oct. 29, so prior to Halloween and Election Day. That logistical information is pertinent because the topic is holiday shopping. Specifically, consumers’ pensiveness regarding how the 2024 holiday season could pinch their finances.
Point is there is apprehension among consumers and it’s not even Halloween and the results of the 2024 presidential election – an event that could easily unnerve investors and shoppers alike. Yes, there’s a lot of moving parts to consumer sentiment and spending and I’m not just talking about the monthly reports.
It’s not a secret that consumers and market participants often feel better about the economy when their preferred political candidates are in power or leading in the polls. So perhaps shoppers’ worries about this holiday season are to be taken with a grain of salt, but they’re not to be ignored, either. Consider the following.
“A new survey from Thrivent finds 2 out of every 3 Americans have concerns about how they'll manage their holiday finances this year, including 27% of people who are 'very concerned,’” according to the asset manager.
Economic Outlook Could Weigh on Holiday Spending
Experienced advisors and investors know that there are certain times of the year that are conducive to increased consumer spending and the fourth quarter/holiday season leads the way. That’s always the case, but consumer spending trends – even those pertaining to the holidays – are impacted by individual views on the economy.
That long-standing trend highlights the importance of the findings of Thrivent's 2024 Holiday Spending Survey. Citing the current state of the U.S. economy, a third of those polled are expecting to spend less on gifts this holiday season and 31% said they’re going to buy fewer presents. Politics weren’t cited as a reason for the restrained spending, but inflation was.
“Increased prices are Americans' biggest concern, with more than half (55%) saying they're worried about rising costs. Boomers (61%) and Gen X (58%) are more concerned than Millennials (51%) and Gen Z (48%),” according to Thrivent.
While holiday spending plans usually aren’t top of mind for advisors and clients in their interactions with each other, it’s a topic advisors ought to consider at least mentioning because it could be perceived as a value add. After all, profligate spending is often the result of not having a plan.
“Despite their financial concerns, among Americans who typically overspend during the holidays, only 20% believe following a financial plan will help them rein in their spending,” adds Thrivent. “Overall, 35% of Americans reveal they're not seeking financial advice from anywhere to help them plan their spending.”
How Advisors Can Help
Should holiday spending pop up in client conversations, advisors can help with planning and the time is right for that. Obviously, one element of such plans is budgeting and sticking to it.
Within that, it’s not about telling clients how to live their lives, but rather discussing topics such as the importance of leveraging the holidays as a time of reflection and enjoying the company of loved ones. In terms of nitty-gritty advice, being leery of social media during the holidays is a good place to start.
“Social media can be a double-edged sword when it comes to holiday spending. While these platforms offer inspiration, they may also lead to impulsive purchases or comparisons,” observes Thrivent. “To stay focused on financial goals, consider taking a digital detox by unsubscribing from retail emails, deleting shopping apps or moderating social media usage. This can help reduce the temptation to buy more based on trends or social pressure.”
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