Retail sales in the 2024 holiday shopping period from November 1 to December 24, excluding automotive results, should increase by 3.2% across all forms of payment, according to Mastercard SpendingPulse.
Mastercard expects online retail spending, excluding automobile sales, to grow 7.1% year over year in the holiday season. The shorter November 1-to-December 24 shopping season in 2024 versus 2023 includes a Black Friday that falls later in November than last year, which may encourage retailers to push early promotions harder on one hand and prompt consumers to do more holiday shopping, especially online, in December on the other, Mastercard maintained.
Some key developments that will influence holiday spending, according to Mastercard:
- Job creation is still healthy but has cooled, yet layoff rates are very low, and the number of job openings still slightly exceeds the number of unemployed individuals.
- Although it has slowed, nominal wage growth remains above the pre-pandemic average, and interest rates are declining as the United States Federal Reserve eases monetary policy, which may improve the outlook of some borrowers.
- Even as household debt has accrued and generated greater debt service, so has household wealth as financial assets and housing have been appreciating in value, which provides a positive wealth effect.
- Consumers expected a slowing rate of inflation and have lately gotten their wish, which in some products categories has led to outright deflation and happier shoppers.
In its outlook, Mastercard noted electronics sales could get a boost from declining borrowing costs, lower prices and the replacement of older items that were purchased during the pandemic. The growing prevalence of online streaming platforms and immersive experiences is lifting demand for high-tech gadgets such that SpendingPulse estimates electronics sales to increase by 6.7% from 2023.
For value-conscious consumers who feel stretched by economic pressures, discounts and promotions have become essential spending prerequisites, Mastercard asserted. However, the other end of the economic continuum is more confident and feels freer to spend. That said, most consumers fall somewhere in between, and their behavior at times shifts toward one end of the spectrum or the other, depending on circumstances. Household with financial and real estate assets have experienced significant wealth appreciation since the fourth quarter of 2019, with the value of financial holdings up 31% and real estate holdings up 49%, according to Mastercard. Yet, for households with debt, the rise in interest rates has created strain.
