How do the Holidays Affect the Economy?
Taylor Casey
Although there isn’t any snow in Wisconsin yet, it is no surprise that the upcoming holidays are on the minds of many people. This year, 87% of consumers are planning to celebrate the winter holidays. Even amidst all of the uncertainty that this year has brought, the holiday season provides an opportunity to join together with family, enjoy food, exchange gifts and continue traditions. Economically, the holiday season also greatly benefits the economy. No matter what holiday you are celebrating, there is still a need for lots of purchases to be made, which all benefit the US economy.
From early November to Late November, there is an increase of 26% of people who start shopping for the holiday season. In early November, about 59% of consumers start holiday shopping. At the end of the month, 85% of consumers have started shopping for the holidays. One of those reasons might be due to Black Friday, which is a retail “holiday”, which marks the beginning of many consumer’s holiday shopping. The diagram below illustrates the average amount of shoppers and average spending that occurs on holiday items just on Thanksgiving weekend alone. This infographic put out by the National Retail Federation (NRF) shows that there is lots of holiday spending going on not just around the holidays, but especially on the last weekend of November.
Along with Black Friday helping to jump start the holiday spending season, the overall holidays bring economic growth to the country. You can’t buy your Christmas dinner a month in advance, and you can’t buy last minute gifts after the holiday. This shows that the select time frame in which spending occurs is clearly defined. Consumer spending makes up 70% of gross domestic product, with most purchases taking place in November and December. Information from the NRF shows that, “Consumers plan to spend $998 on average on items such as gifts, food, decorations, and other holiday related purchases for themselves and their families.” This can also be seen in the chart below. The amount of money spent during the holiday season is able to help the economy. When people spend money in businesses, there is economic growth as well. When there is growth, there are higher living standards, higher incomes, and therefore they are able to put some of their money back into the economy. It is the cycle that essentially benefits many people.
Currently, the COVID-19 pandemic has affected many aspects of the US and its economy. Will the pandemic have an effect on holiday shopping and spending? In short, no. Looking at the projected spending for this holiday season, there is not a large decline in consumer spending this holiday season. Just like every other winter holiday season, consumers are spending just as much this year on gifts and other items like in years past. When purchasing non-gift items for themselves or others, consumers are a little more hesitant, however as seen in the tables below, there is not a large decline. An interesting fact that I learned while researching was the fact that around $25 Billion will be spent on gift cards alone this holiday season. All of these show how much the holiday season is able to help the economy of the United States. In the end, the holiday season and the habits of consumers have continued to help the economy of the United States year after year, and 2020 is no different.
Works Cited
Claus, Damon. “Exactly How Important Is Holiday Shopping for the U.S. Economy?” CASTUS, CASTUS, 2 Dec. 2019, castusglobal.com/blog/exactly-how-important-is-holiday-shopping-for-the-us-economy.
Inman, Danielle. “Holiday Shoppers Take Advantage of Early, Thanksgiving Weekend Deals.” NRF, 1 Dec. 2020, nrf.com/insights/holiday-and-seasonal-trends/winter-holidays.
Light, Larry. “Why Holiday Shopping Is so Important for the U.S. Economy.” CBS News, CBS Interactive, 28 Nov. 2016, www.cbsnews.com/news/why-holiday-shopping-is-so-important-for-the-economy/.
I think that it is interesting that the amount spent on gifts, decor, and food is $998 per person. That seems crazy to me, although I know that the number is pretty increased due to averaging. It makes me wonder how much money people in other countries spend on the holidays. Is America alone on this high spending, or is it usual for people to spend this much? I think that it make sense that holiday spending wouldn't go down due to the pandemic, I actually think that holiday spending could go up. Due to not being able to spend time with people over the holidays, I feel that more people would be getting thoughtful and wholesome gifts for people because they miss their friends and family.
ReplyDeleteI never really thought about the statistics of the economy during the holidays I always just assumed that people were out shopping more and didn’t pay any other thoughts to it. The most interesting thing I read while looking at your blog post was the fact that, in short, the pandemic has not lessened the amount of people spending and shopping for Christmas. I honesty thought the pandemic would result in less people spending and shopping for the holidays because I know some families aren’t getting together due to COVID but I’m interested to hear that people are continuing to spend as much as they would on a regular Christmas. It’s cool to see the statistics on how much the holiday season continues to help the economy.
ReplyDeleteThis article was very interesting to read. I previously knew that the holidays boosted the economy, but I was surprised to learn that COVID-19 is not predicted to greatly affect consumer spending this holiday season. As we learned in class yesterday, the third quarter GDP has grown significantly compared to second quarter’s numbers, which signals an economic recovery, so I wonder how this fourth quarter’s numbers will be improved considering the fact that the holiday season makes up a lot of the year’s consumer purchases. After thinking about it though, it makes sense that consumers are able to spend similar amounts of money during the holidays because they are less likely to travel so they might have extra money to spend.
ReplyDeleteI was a little surprised to see that holiday spending decreased as little as it did. I would have thought that because of the pandemic, holiday spending would decrease by a significant amount. I think although some people aren't celebrating the holidays in person, they still want to buy things for their loved ones, and possibly just ship them the gifts. It gives a much needed sense of normalcy to be able to buy gifts this season. To add on, I think that people are just tired of the virus and the restrictions at this point. They itch to get back to normal, and this was an opportunity to do so. Stores weren't going to close for the holiday shopping season, their most profitable time. People jumped on the opportunity to, again, do something normal for a change this year.
ReplyDeleteGoing back to your second chart, which I thought was the most informative, if it were to report this year as well after the holidays happen, I think we will see a slight dip in spending. We may see the amount of spending on food increase(black section?), as some people decide to stay home which increases the number of meals made nationally, while the spending on gifts would decrease because people may not see extended family. Even if my prediction is wrong and the majority of people decide to carry on with their holidays safely (presumably), I don't foresee the second chart continuing to move relatively linearly as it has in the past reported years.
ReplyDeleteWhen talking about the economy, holidays don't get talked about as much and hoe much they do for the economy which is why these statistics suprised me. I didn't think the pandemic would have a huge affect on holiday shopping because people still want to get into the spirit, if they have to they'll just shop for things online, which people do a lot more often nowadays.
ReplyDelete$25 billion spent on gift cards alone! That’s crazy! There is absolutely no doubt that the holiday season helps the economy in a quite significant way. People are buying so much more compared to what they normally would during the holiday season. Even after the holiday season is considered to be over the spending people are doing on the decorations or other holiday related things that are on sale must benefit the economy pretty well too. I think that the Fourth of July is probably another big holiday that helps the economy. Everybody is buying stuff for cookouts, red, white, and blue clothes, fireworks, and so much more. I have never really thought about how much holidays affect the economy, but after reading your piece I keep making connections, nice job!
ReplyDelete