2024 holiday spending – The holiday season is a time of joy, connection, and celebration, but for many Americans, it also means increased spending. In 2024, U.S. consumers are showing signs of resilience as they prepare to spend more on holiday-related purchases than in the past few years. According to The Conference Board’s Holiday Spending Survey, the average consumer plans to spend $1,063 this year—a 7.9% increase from 2023.
However, beneath the surface of these nominal figures lies a more complex reality. Inflation, which has persisted over the past few years, continues to erode purchasing power. Adjusted for inflation, holiday spending in 2024 remains below pre-pandemic levels, highlighting a cautious optimism among shoppers.
This detailed exploration examines the nuances of holiday spending trends in 2024, providing insights into consumer behavior, demographic differences, and the broader economic landscape shaping this season’s celebrations.
2024 Holiday Spending Overview: More Dollars, Less Value
The 7.9% increase in planned holiday spending marks a rebound from previous years, with consumers allocating $1,063 on average for gifts, decorations, food, and more. This nominal growth is a testament to improved consumer confidence, supported by a resilient job market and easing inflation compared to its peak.
Yet, when adjusted for inflation, the story changes:
- In real terms, holiday spending is equivalent to $860 in 2017 dollars, up only 5.3% from 2023.
- This figure falls below spending levels in 2021 and 2022, underscoring the lingering effects of several years of high inflation.
While the headline numbers suggest optimism, the inflation-adjusted reality reflects limitations on what consumers can afford.
Breakdown of Holiday Budgets
Gift Spending
Gifts remain the centerpiece of holiday expenditures, with Americans planning to spend an average of $677, up 3.4% from $654 in 2023. However, the growth in gift budgets is modest compared to the increase in non-gift spending.
Non-Gift Items
Budgets for non-gift items, including food, decorations, and wrapping paper, are up by a significant 17%, reaching $387 on average. This surge reflects rising costs for essentials and a renewed emphasis on home-based celebrations.
The sharp increase in non-gift spending highlights the inflationary pressures on everyday holiday essentials, forcing consumers to prioritize where their dollars go.
Demographic Insights: Who’s Spending More and Who’s Cutting Back
Not all consumers are approaching the holiday season with the same spending mindset. Age and income play pivotal roles in shaping holiday budgets.
Spending by Age Group
- Younger Consumers: Those under 45 are leading the charge in increased holiday spending. Their willingness to spend more reflects higher confidence levels and a focus on experiences and gifts for children.
- Middle-Aged Consumers (55-64): This group shows the largest increase in non-gift spending, likely driven by hosting responsibilities and a desire to create memorable celebrations.
- Older Consumers (65+): Retirees are scaling back, with reductions in both gift and non-gift budgets compared to last year, reflecting fixed incomes and sensitivity to rising prices.
Spending by Income Level
- High-Income Households ($125K+): Wealthier consumers are driving much of the spending growth, with significant increases in both gift and non-gift categories.
- Middle-Income Households ($75K–$100K): These consumers also report increased spending but remain cautious about stretching budgets too thin.
- Lower-Income Households (<$75K): Households with tighter budgets are cutting back on holiday spending, particularly in discretionary areas like gifts.
These demographic insights reveal the uneven impact of inflation and the broader economy on holiday spending behaviors.
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Evolving Shopping Habits in 2024
The way Americans shop for the holidays has undergone dramatic changes over the past decade, accelerated by the pandemic. In 2024, these trends are stabilizing, with a mix of online and in-store shopping.
Online Shopping Trends
- Stabilization After the Pandemic Surge: While 43% of consumers plan to do at least half their shopping online, this figure is slightly lower than in 2023, suggesting a return to pre-pandemic habits.
- Hybrid Shopping Preferences: Many consumers are blending online and in-store shopping, valuing the convenience of e-commerce and the tactile experience of physical stores.
- Minimal Exclusively In-Store Shopping: Only 8% of consumers plan to do all their shopping in physical stores, reflecting the enduring appeal of online options.
Popular Gift Categories
- On the Rise:
- Vacation and Travel: Experiences are gaining traction as gifts, reflecting a shift in consumer priorities.
- Gift Cards: These remain a favorite for their flexibility and ease.
- Toys and Games: A perennial favorite, especially for younger demographics.
- Declining Popularity:
- Books, Music, and DVDs: Physical media continues to lose ground to digital formats.
- Beauty Products and Home Décor: These categories are seeing reduced interest, potentially due to budget constraints.
The Impact of Inflation on Holiday Celebrations
Despite easing inflation compared to its peak, the cumulative effect of several years of rising prices continues to shape holiday behavior.
Price Expectations for 2024
- Higher Costs: About 50% of consumers expect to pay more for gifts and food this year, though this share is lower than in 2023.
- Cautious Spending: Many consumers are adjusting their budgets, seeking discounts, and prioritizing value to offset higher costs.
Staying Close to Home
- Limited Travel Plans:
- 69% of consumers plan to celebrate at home or near home, a trend consistent with previous years.
- Among those traveling, driving remains the most popular mode of transportation, reflecting cost-conscious decision-making.
- Focus on Home Celebrations: Rising costs for travel and accommodations are encouraging consumers to invest in creating memorable home-based celebrations instead.
Consumer Confidence: A Mixed Picture
The October rebound in the Consumer Confidence Index® suggests optimism among Americans, driven by a strong labor market and easing inflation. However, this optimism is tempered by lingering economic challenges.
What’s Driving Confidence?
- Resilient Job Market: Low unemployment rates and steady job growth have boosted consumer sentiment.
- Easing Inflation: While prices remain high, the pace of inflation has slowed, offering some relief.
- Pent-Up Demand: After years of pandemic-related disruptions, consumers are eager to return to traditional holiday activities.
Challenges Ahead
- Persistent Inflation: Even with slowing inflation, elevated price levels continue to strain budgets.
- Economic Uncertainty: Concerns about interest rates and the broader economy are weighing on some consumers’ minds.
Strategies for Navigating the 2024 Holiday Season
Whether you’re a consumer looking to maximize your holiday budget or a retailer aiming to capture seasonal demand, strategic planning is essential.
Tips for Consumers
- Set a Budget: Outline your spending limits early and stick to them to avoid financial strain.
- Shop Early: Take advantage of early sales and promotions to secure the best deals.
- Prioritize Value: Focus on meaningful gifts and experiences that resonate with your loved ones.
- Use Technology: Leverage apps and tools to track prices and find the best deals.
Tips for Retailers
- Highlight Value: Showcase discounts and promotions to appeal to cost-conscious shoppers.
- Enhance Online Experiences: Invest in user-friendly e-commerce platforms to attract digital-first consumers.
- Cater to Demographics: Tailor marketing efforts to younger and wealthier consumers, who are driving spending growth.
- Focus on Popular Categories: Promote travel-related gifts, gift cards, and toys to align with consumer preferences.
Looking Beyond 2024
As the holiday season unfolds, it offers a window into broader economic and cultural trends. The interplay between consumer optimism, inflation, and evolving shopping habits will shape not only this season but also future celebrations.
For consumers, the holidays are an opportunity to focus on connection and joy, even in the face of financial challenges. For businesses, the season presents a chance to adapt, innovate, and meet the evolving needs of their customers.
Here’s to a festive and fulfilling holiday season—no matter how you choose to celebrate.
