“American Shoppers Celebrate the Holidays Despite Financial Worries and Rising Prices
As Americans tucked into their turkey dinners and opened presents last December, it was clear that holiday spent in the United States was anything but business as usual. Despite economic stagnation and surging coronavirus cases, Americans ramped up their spending during the holidays, outspending last year’s figures by a significant margin.
Experts attribute the increased holiday spending to a combination of pandemic fatigue, a renewed sense of financial security, and the generosity of Americans to support those affected by the pandemic.
Data from the 2020 Survey of Consumer Finances (SCF) suggests that Americans were more open to discretionary spending due to improved financial circumstances. Although there was still a noticeable degree of financial anxiety among consumers, those who felt the financial pinch the least – likely highest earners – were the ones most willing to increase their holiday shopping budget. This indicates that the federal response to the crisis may have had a significant impact in bolstering incomes of those in the top tax brackets.
At the same time, Americans appeared to be more willing to “treat themselves” with the additional funds, rather than to safe harbor their savings. This could be seen in the increase of online spending, which surged 42 percent year-over-year to $207 billion. This figure also included an increase in online services like food delivery, along with a 27 percent increase in furniture sales.
The buying spree extended beyond typical items. Americans also opened their wallets for experiences, from paying for virtual events to booking socially distant ski trips and spa days. Some people even put a twist on traditional gift-giving with thoughtfully curated presents full of activities and vouchers for future trips.
Americans uptake in discretionary spending wasn’t without consequences though: costs for some of the most sought-after items – including electronics, ski vacation packages, and restaurant dining – increased significantly. Higher demand and limited capacity due to coronavirus protocols meant that businesses felt the crunch when it came to fulfilling customer orders.
As economic conditions improve and the holiday season approaches again for 2021, the success of last year’s holiday spending may be debris in the rearview mirror. Nonetheless, the 2020 holiday season was an opportunity for American consumers to demonstrate their resilience in the face of economic hardship, along with a stubborn optimism that we will make it out of this predicament by showering our loved ones with holiday cheer – and a whole lot of presents.
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