Uncertainty affects holiday sales for consumers as inflation creates pressure | So Good News

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American households are taking on more debt as prices rise, a sign of consumer stress

Families don’t like to skimp when it comes to holidays, under any circumstances.

But with rising prices and fears of a recession, holiday shoppers are feeling extra generous this season.

Most shoppers are planning to buy less — and at a lower price, according to Deloitte’s latest holiday report.

However, families will spend $1,455, on average, on holiday gifts, compared to last year, the report found.

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Although some consumers may spend more than they did in 2021, this is mainly due to higher prices, other reports also show.

“Inflation is the biggest concern for families this year,” said Tim Quinlan, chief economist at Wells Fargo and author of its 2022 holiday shopping report.

Household income has hit a low risk and reduced real wages, which could slow holiday sales, Quinlan said in the report.

“The bottom line is, with inflation still on the horizon, the dollar is not doing well, and many buyers will still be looking for bargains.”

Dollars are not increasing, and many consumers will still be looking for deals.

Tim Quinlan

financial analyst at Wells Fargo

A report by BlackFriday.com found that 70% of shoppers will be considering price increases when shopping this holiday season and more will be looking for bargains.

About 33% of shoppers also plan to buy fewer gifts this year, while nearly one-third said they’ll choose cheaper brands or more practical gifts, such as gas cards, according to TransUnion’s holiday survey.

“People are trying to get wealth and benefit from what they have,” he said Cecilia Seiden, TransUnion’s vice president of sales.

How to avoid holiday debt

“Remember to stay out of debt when you shop for the holidays,” warns Natalia Brown, chief client officer at National Debt Relief. “Debt prevents people from achieving their financial goals — like building an emergency fund, buying a home and saving for retirement.”

Vacation spending can come at a high price if it means paying off extra credit card debt as the Federal Reserve raises interest rates to slow inflation, Quinlan added.

Annual rates are currently around 18%, on average, but could be closer to 19% by the end of the year, which would be much higher, according to Ted Rossman, senior industry analyst at CreditCards.com.

This will leave consumers worse off in 2023, Quinlan said. “In many ways we see this year’s holiday shopping season as the last time.”

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