The winter holiday shopping season is in full swing—and has been for many since fall began. The basic theme remains the same: Shoppers will feverishly continue to try to find the perfect meaningful gifts for everyone on their list.
From the shopping frenzies of Black Friday and Cyber Monday to the last-minute sales just before the actual holidays happen, the American commercialization of the holidays plays a big part in how much the average American pays for all their holiday expenses over Thanksgiving, Christmas, Hanukkah, and Kwanzaa.
Nov. 1 - Dec. 31
The winter holiday season, as defined by the National Retail Federation (NRF).
With gifts, parties, decorations, and record-high inflation, the holiday season in America is getting more and more expensive. Below is a look at the average cost of the American holiday season and why the cost is steadily rising.
- Every year since 2009, American consumer spending on holiday gifts and other holiday expenses has increased over the previous year.
- When it comes to planned holiday spending, Americans expect to spend $832, about $47 less than the $879 they shelled out in 2021.
- Overall spending over the holidays, however, is expected to total a record-breaking $942 billion to $960 billion.
- Over the past decade, eCommerce has captured an increasing percentage of holiday spending.
- As the restrictions of 2020 recede further, the new chief concerns are costs and travel disruptions. Travel is expected to be either slightly up or down for 2022, compared to 2021.
Planned Winter Holiday Spending for 2022
Holiday retail sales in November and December 2022 are expected to grow 6% to 8% over 2021's record sales of $889.3 billion to a new record of between $942.6 billion and $960.4 billion. Holiday sales have averaged an increase of 4.9% over the past 10 years, with spending in 2021 providing an unprecedented 14.1% boost in sales, primarily due to pent-up pandemic demand, according to National Retail Federation (NRF) President and CEO Matt Shay.
According to data provided by the NRF, Americans plan to spend roughly $832 each on gifts, food, and decorations in 2022. This is in line with the historical (10-year) average of $826 but below 2021's average spending amount of $879.
The top five gift categories consumers plan to spend on are clothing (55%), gift cards (45%), toys (37%), media (33%), and food/candy (31%). Many of these gifts will be purchased over Thanksgiving weekend by a record estimated 166.3 million shoppers. This is almost 8 million more people than last year and is the highest estimate since NRF began tracking this data in 2017.
NRF expects online and other non-store sales to increase between 10% and 12% to between $262.8 billion and $267.6 billion over the holidays. This figure is up from $238.9 billion in 2021, which saw significant growth in digital channels during the pandemic. as consumers turned to online shopping to meet their holiday needs during the pandemic.
The average amount that consumers expect to spend on winter holidays in 2022.
Less Individual Holiday Spending, More Overall
Looking at the numbers in the chart above, it’s clear that consumers plan to spend less on an individual basis in 2022 vs. 2021. Nevertheless, the NRF projects that overall holiday sales will grow 6% to 8%. How can both things be true?
The NRF projects retail sales over the holidays (Nov. 1 through Dec. 31) including “traditional holiday purchases but also items not specifically for holiday celebrations.” Separately, the NRF surveys consumers on planned holiday spending only. Simply put, while consumers plan to spend less on holiday expenses, they are expected to spend more overall during the holiday season. This was also true for 2021 compared to 2020.
The NRF references the Personal Consumption Expenditures (PCE) inflation index instead of the Consumer Price Index (CPI) because the former breaks out expenditures into the same components the NRF measures. PCE inflation rates tend to be lower than those of the CPI.
The Impact of Inflation on Spending
Higher prices and inflation are major topics this year. According to the NRF, 81% of holiday shoppers expect to see higher prices when shopping for gifts and other items, almost two-thirds (63%) say sales and promotions are top of mind this year, but nearly all (91%) still plan to celebrate the holidays.
Real gross domestic product increased by 2.6% in the third quarter of 2022, which the NRF characterized as a "healthy economic increase that sets the tone for the fourth quarter." Given the fact that consumer spending is a big contributor to economic growth, how it is influenced by inflation matters.
The PCE inflation index showed an average increase of 6.2% year-over-year, with an 8.1% increase on a year-over-year basis for goods and 5.3% for services as of September 2022. Because the PCE considers the substitution of one (lower-priced) product for another, it helps explain increased consumer spending in an inflated market.
“Consumer demand really remains intact even though we are seeing rising interest rates, persistent inflation, [and] certainly political uncertainty,” noted NRF Chief Economist Jack Kleinhenz in a recent NRF webinar.
The picture on who will travel and how much is mixed. It's either slightly up or down noticeably.
According to The Vacationer’s 2022 Thanksgiving Travel Survey, nearly 112 million U.S. residents plan to travel for Thanksgiving this year—a slight bump from last year's 109 million. About the same number say they are planning to travel for the December holidays. They're also expecting that travel will cost more than last year. In fact, nearly 29% expect that Thanksgiving travel will cost more than $500—last year that percentage was 20.13,
By contrast, a survey by Deloitte found 2022 travel intentions are down 26% from 2021. Just under a third plan to travel, with higher-income Americans traveling more. Travelers report budgeting an average of $1,287. "This figure is heavily influenced by higher-income travelers, who are much more likely to travel and have an average budget of $1,848," Deloitte reports.
The Bottom Line
Americans’ actual spending has increased each holiday season since 2010, and that tradition is expected to continue in 2022. Holiday retail sales in November and December 2022 are expected to grow 6% to 8% over 2021's record sales, reaching a new record. Each person's individual gift spending may be a bit lower, however, with higher prices for other seasonal expenditures as the reason that overall spending will go up.
That said, the economic realities of 2022 are expected to result in less spending on travel over the holidays for low- to moderate-income households, as it did in 2021. Deloitte also found that, among age 55+ respondents, travel dropped from 36% last year to 22% this year, with 22% concerned about trip disruption and 12% about health.
Of course, we won’t know how much people actually spent until the holiday season is over. Stay tuned.