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Average Holiday Spending Expected to Jump 5%, Driven by Higher-Income Households
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While retail sales unexpectedly increased in September, whether that trend will spill over to the holidays remains to be seen.
According to Deloitte’s annual holiday retail survey, average holiday spending is expected to jump 5% to $1,463 this year, up from $1,387 in 2020.
This year, more than half (55%) of consumers plan to spend the same amount of money on holiday shopping as in 2020, 25% intend to spend less and 20% expect to spend more. This breakdown puts holiday spending closer to 2019 pre-pandemic levels.
Higher-income households are propelling spending increase
Predictably, households with higher earnings (more than $100,000 a year) are leading the spending charge this holiday season. The survey from Deloitte, an accounting and consulting firm based in New York, estimates average holiday spending among these high earners will be $2,624, a 15% boost from $2,279 in 2020.
On the flip side, the average expected spend for lower-income households (less than $50,000 a year) Is $536, a 22% drop from $688 in 2020. Among middle-income earners ($50,000 to $99,999 a year), holiday spending is expected to see little change — $1,187 in 2021, compared with $1,152 in 2020.
While higher-income households are expected to flash more cash this year during the holidays, households raking in less dough are refraining from spending. While only 12% of higher-income earners say they’re sitting out in 2021, 23% of middle-income earners and a whopping 65% of lower-income households don’t intend to spend this year. Overall, about 12% of respondents are opting for a no-spend holiday this year.
Amid changing landscape, consumers to spend more on experiences than during pandemic
While there wasn’t much to spend on travel, live entertainment and sporting events in 2020 amid the peak of the coronavirus pandemic, consumers expect to shell out more clams on experiences this year — $536, versus $465 last year. Folks in 2021 also plan to spend $501 on gifts and $426 on nongifts, combining with the expected spending on experiences of $536 to reach the total average expected holiday shopping spend of $1,463, as mentioned above.
Among respondents, clothing and accessories (22%), gift cards and other (17%), electronics and accessories (14%), and food and beverage (14%) will eat up the lion’s share of consumers’ spending this holiday season. On the flip side, folks are curtailing dollars spent on domestic categories. The fewest percentage of dollars will be doled out on pets (5%), home and kitchen (8%), and health and wellness (8%).
Financial situations seem to be stabilizing
This year, the overall rise in holiday spending could be chalked up to folks feeling a general sense of optimism about their money situation.
More than 3 in 4 consumers (78%) say their financial situations are better or the same in 2021 than the year before, versus 71% who felt this way in 2020 about the year before. However, 67% say they think the economy will improve or stay the same in 2022, versus 73% expressing this sentiment in 2020 (about 2021).
As for pulling out the plastic, respondents say 42% of their total holiday spending will be paid for using a credit card, a slight increase from 38% in 2020.
To avoid a holiday debt hangover, which could put you on shaky financial footing for the new year, stick to a spending limit on your credit card. Consider redeeming rewards on cashback credit cards, which could be used on travel, gift cards and tangible items.
Methodology: Deloitte commissioned a survey of 4,315 U.S. consumers, fielded Sept. 7-14, 2021. Our reporting focused solely on the consumer sentiment portion of Deloitte’s survey.