SO SAYS ZIONS BANK'S SPENDLOVE
Brice Wallace
If you listen carefully this holiday season, sprinkled into the “jing-jing-a-ling” likely will be a decent amount of “cha-ching!”
That’s because the outlook for holiday shoppers’ spending is bright and expected to keep retailers merry.
Holiday spending is projected to grow between 2.5 percent and 3.5 percent over last year, boosted by a 7 percent to 9 percent jump in online purchases and in line with historical holiday spending growth.
And a variety of economic factors could boost those numbers even higher in Utah. Robert Spendlove, Zions Bank’s senior economist, suggested as much during a news conference about holiday spending last week at Katie Waltman Boutique, a Salt Lake City-based clothing and jewelry retailer.
“Utahns are feeling better about the economy than they were last year,” Spendlove said, citing results of the Kem C. Gardner Policy Institute’s Survey of Utah Consumer Sentiment that indicate buyer sentiment is up nearly 17 percent since last year.
And while inflation “was the ‘Grinch that stole spending’ over the last several years,” Utah consumers are regaining some spending power, he said. Utahns’ per capita personal income is up nearly 5 percent this year, which outpaces both inflation and the national average.
Moreover, inflation was less of a factor in the Mountain region than nationally during the past year, with the rate increase of 1.3 percent in the region being half the national figure. “So, that means Utahns’ dollars will stretch further this holiday season,” Spendlove said.
Also boosting Utah is a strong job market, he added.
“A low unemployment rate correlates with higher spending and also higher consumer confidence, and while it’s trending up, Utah’s relatively low unemployment rate of three and a half percent is good news for local retailers who will get a boost from holiday sales,” Spendlove said. “With more money in shoppers’ wallets, strong spending is set to bring holiday cheer to Utah’s retail sector and economy.”
Hampering the good outlook are high housing costs, which he said “continue to be the low area of our economy and continue to strain household budgets.” Housing prices are up 2.5 percent in the Mountain region and 4.2 percent nationally since last year, with the pain being greater for people who rent or who purchased a home in the past three years, he said.
Strong holiday spending would dovetail a strong autumn for retail spending as Walmart has reported higher-than-expected sales and an upgraded forecast for the rest of the year and Home Depot and Gap have announced solid sales expectations.
The outlook is also bright at Katie Waltman Boutique at 2108 E. 1300 S., Salt Lake City. Co-owned since 2011 by the brother-sister combo of John and Katie Waltman, the shop has been at its current location since 2022.
“Our sales are actually up year over year, and I think that we are benefiting from a lot of that good economic outlook in Utah specifically,” said John Waltman. “We’ve also been here, this is only our third year in this location, so people are starting to know that we’re here and coming back to us, so things are really looking good for this year.”
Exactly how good remains to be seen because the shop, like other retailers, has faced inflation issues related to materials and overhead, he said. Helping to overcome that is “immense support from the neighborhood” that the store has experienced.
“I think that they go out of their way to come and shop local and spend their time and money at a local business, so we appreciate that,” Waltman said.
Spendlove noted that certain items could provide relative savings this holiday season. The price of toys is down 2.8 percent from a year ago, and electronics such as televisions and computers likewise are less expensive this season. And gasoline prices have shrunk 12.5 percent nationally and 18.6 percent in the Mountain region.
“These are all great trends that are pointing towards much better shopping outlooks,” Spendlove said.
A record 183.4 million people were expected to shop online and in stores on Black Friday weekend, an increase over last year’s 182 million, according to the National Retail Federation. The weekend traditionally kicks off the holiday shopping season, which this year is only 26 days because of Thanksgiving falling on its latest day, Nov. 28.
“What this does is it squeezes the amount of time that shoppers can find gifts,” Spendlove said, “and it also squeezes the amount of time that retailers can generate revenue during this crucial time.”
The National Retail Federation is projecting spending on winter holiday gifts and celebrations to reach $901.99 per person, up from $874.67 in 2023. On average, the NRF survey revealed that consumers plan to spend about $641 of their holiday budgets for gifts for loved ones, with the remaining $261 for seasonal items like food, decorations and holiday cards.
That spending puts the overall holiday projection at a record of somewhere between $979.5 billion and $989 billion, up from $955.6 billion during the November-December period last year.
“The economy remains fundamentally healthy and continues to maintain its momentum heading into the final months of the year,” said Matthew Shay, NRF president and CEO. “The winter holidays are an important tradition to American families, and their capacity to spend will continue to be supported by a strong job market and wage growth.”
Other projections show an upward swing. KPMG’s survey shows U.S. consumers are set to spend 4 percent more on holiday shopping this year, with average per-person spending projected to reach $948, compared to $911 in 2023. Deloitte’s annual holiday retail forecast is showing a rise of between 2.3 percent and 3.3 percent from a year ago, for a total of $1.58 trillion to $1.59 trillion during the November-to-January timeframe.
The online holiday shopping component is expected to total between $295.1 billion and $297.9 billion, up from last year’s $273.3 billion, according to the NRF. Fifty-seven percent of consumers planned to shop online this season. Deloitte pegs the overall online figure at $289 billion to $294 billion, up 7 percent to 9 percent from 2023.
“We remain optimistic about the pace of economic activity and growth projected in the second half of the year,” said Jack Kleinhenz, NRF chief economist. “Household finances are in good shape and an impetus for strong spending heading into the holiday season, though households will spend more cautiously.”
More than half — 58 percent — of consumers had started holiday shopping as of early November, completing about one-fourth of their planned purchases.
“Younger shoppers are most likely to take advantage of Thanksgiving weekend deals this year, with 89 percent of young adults between 18 and 24 planning to shop over the weekend,” said Phil Rist, executive vice president of strategy at Prosper Insights & Analytics. “The social aspect of holiday shopping is also enticing to this age group, and they are most likely to shop because it’s a group activity that can be enjoyed with friends and family.”