Recession or Not, Consumers Plan to Spend Less Due to Uncertainty

© Bloomberg. Shoppers walk past Macy's in New York, U.S., on Monday, Dec. 27, 2021. U.S. holiday sales jumped 8.5% from last year as consumers spent more money on clothes, jewelry and electronics, a report from Mastercard SpendingPulse showed.

(Bloomberg) -- News about inflation, shortages and interest-rate hikes might crash the economy faster than the macro factors themselves.

Data provided by market research firm NPD Group shows 29% of US consumers are considering a tighter spending budget this holiday season, due to increased negativity about the economy and personal finances.

“Consumers are ready to get out and celebrate over the 2022 holiday season, but last year’s optimism has taken a beating as financial concerns have them feeling a bit more grinchy this year,” said Marshal Cohen, chief retail industry adviser for NPD.

One in five holiday shoppers say they will spend less over the holidays because their economic situation has changed and more than one in ten consumers will be spending less on gifts so they can spend more on holiday entertaining-related expenses, like food, drink, and decorations.

Early shopping is taking hold with 39% starting before October, according to NPD. Cohen says early promotional events will help consumers spread their shopping across the holiday season. One holiday benefiting from early shoppers is Halloween which is tracking for record high spending this year, according to the National Retail Federation. But those findings were based on a survey conducted the first week of September — before the last Federal Reserve rate hike.

Deloitte’s annual holiday retail forecast is projecting slowed growth of 4% to 6% for November to January.

“Ongoing talk of a possible recession is creating a self-fulfilling prophecy,” said Anthemos Georgiades, chief executive officer of Zumper, a housing rental site. Seventy-six percent of US residents surveyed for the company’s annual report said they think we’re in a recession.

“If three quarters of the U.S. population believe we’re in a recession and are trimming their budgets accordingly, the economic impacts will be far-reaching and undeniable,” he said.

©2022 Bloomberg L.P.