Dubai Telegraph - Despite doubts over economy, Americans set for record holiday spending

"Consumers remain pretty concerned about inflation and, there's no doubt, about where prices are going," Mark Mathews, chief economist at the National Retail Federation (NRF), told reporters.

For Mathews, the last time consumer confidence was so low -- apart from the aftermath of the coronavirus pandemic -- dates back to the early 1980s.

But, he added, "over the past few years, we've seen consumers spend irrespective of how they're feeling about things."

The National Retail Federation expects holiday sales -- from November 1 to December 31 -- to top $1 trillion for the first time, with growth of 3.7-4.2 percent as compared with last year.

The record-setting 43-day government shutdown, which left hundreds of thousands of federal workers furloughed and without a paycheck, triggered a decline in demand and in revenue for the private sector, but that situation is expected to quickly be reversed.

President Donald Trump's sweeping on-off tariffs however could affect demand for certain products, although experts say competition should temper the effects of tariffs on consumers' wallets.

"We're seeing a deliberate and aggressive approach to avoid passing price increases onto the consumers," said NRF president Matt Shay.

Competition, especially in online deals, should help avert a massive hike in prices.

For buyers, competitive prices and free delivery are two key factors, Vivek Pandya, an analyst at Adobe Digital Insights, told AFP.

The share of sales made online should increase this holiday season to $253.4 billion dollars, up 5.3 percent over last year, according to Adobe Analytics.

A record $5 billion is expected to be spent per day over the 10 days that begins on "Black Friday" and runs through "Cyber Week."

- 'Restraint' -

For Pandya, a 5.3 percent increase in online sales is "actually pretty good" given the variables and challenges in the US economy.

He highlighted that sales in fact were up from October, when Amazon holds its major Prime Day sales.

But the big day will certainly be Black Friday, the day after Thanksgiving, which is the traditional launch of the holiday shopping season -- and also when the best deals are to be had.

That is followed by Cyber Monday, when online shopping takes center stage, especially on electronics and other tech.

For Stephanie Guichard, a senior economist at the Conference Board business research organization, US consumers are remaining "cautious" and may approach gift purchases with some "restraint" after years of inflation-related belt-tightening.

The Conference Board's annual survey revealed that Americans will spend an average of $990 on holiday-related purchases this year, down 6.9 percent from 2024.

When adjusted for inflation, the figures are well under pre-pandemic spending.

"Consumers also said they are focused on giving their family and friends items they need this year rather than items they want," Guichard said in a statement.

More and more Americans are also turning to "buy now, pay later" options to spread out the spending over several months.

- Shopping, AI style -

This year, artificial intelligence chatbots such as ChatGPT and Gemini are gaining traction as a tool for consumers looking for the perfect gift or the best deals.

In October, traffic to US retail websites from generative-AI sources spiked 1,200 percent year-on-year, and those web users were 16 percent more likely to buy something, according to Adobe Analytics.

"This indicates that with AI tools, shoppers are becoming more informed and able to pinpoint the most relevant retailers for their needs," Adobe said.

Another shopping trend is "social commerce," or selling products directly to consumers on social media platforms, often via posts made by influencers.

"Social commerce is incredibly important" this year, Pandya told AFP.

"People are spending a lot of time on their mobile devices, a lot of time on social media apps (...) and these influencers have become very effective at providing really strong discount codes and perks for their audiences to spend."

So what are the hot gift items for 2025?

Experts say the new Nintendo Switch 2 game console and Apple's latest iPhone 17s will be popular, along with household appliances and home renovation items, as economic uncertainty means Americans are less likely to move.

Y.Amjad--DT