With a worrisome November inflation report from the Bureau of Labor Statistics, nearly 68% of American consumers are concerned about holiday shopping and being able to pay for this year’s Christmas lists. A U.S. News survey found that 20% of Americans were waiting until Black Friday to do most of their shopping, with four out of ten consumers stressing that their shopping hauls would be under $500\—an increase from last year’s survey. This time last year, only 32.6% of the respondents said their shopping would be under $500.
IWF Center for Economic Opportunity Director Patrice Onwuka explained that the increase in high interest rates, credit card bills, utilities, mortgages, and other consumer debt has been steadily increasing causing American consumers to dial back on their holiday shopping.” The Federal Reserve Bank of New York reported that the nation’s credit card debt has reached the highest level since 2004, at $1.17 trillion, with upwards of 65% of American consumers living paycheck to paycheck. This was an uptick from last year’s survey, with only 52.5% of consumers living paycheck to paycheck.
Thanks in large part to massive, multi-trillion federal spending bills passed during the Biden-Harris administration, inflation has been steadily rising since early 2021 and Americans have yet to see substantial relief from high inflation rates, nor have price levels returned to their pre-2021 levels.
Former U.S. Treasury Secretary Larry Summers stressed that despite lowering inflation rates from the Federal Reserve, the “inflation genie may not be back in the bottle.” The Federal Reserve cut interest rates around the middle of November, for the second consecutive meeting, and signaled that more cuts were on the horizon. Summers argued that the Federal Reserve could be making a repetitive mistake of responding late to soaring prices and raising interest rates which was the “huge error” of 2021.
With smaller paychecks and less room in household budgets, American consumers are fronting their Christmas list receipts by cutting back in other areas. Twenty-seven percent responded to the U.S. News survey saying they were cutting back in other areas to afford their holiday expenses. Twenty percent of American consumers are planning to put their holiday purchases on their credit cards and carry their balances. With relatively small relief in sight from the Federal Reserve, Americans can thank the Biden-Harris administration for their Christmas blues and tight holiday budgets.