The Great Holiday Shopping Mystery

Holiday shopping is now in full swing, and the one-two punch of Black Friday/Cyber Monday has certainly lightened a lot of American wallets. But given what we know about how people in the U.S. feel about the economy, this upbeat retail data is frankly a little mystifying.

The National Retail Federation, the country’s largest retail trade association, reports that more than 200 million consumers shopped over the long Thanksgiving weekend—more than any other Thanksgiving weekend in history. In fact, the actual numbers smashed the NRF’s mid-November expectations, exceeding them by more than 18 million shoppers.

Now, this is great news for retailers, and it bodes well not just for sales for the rest of the holiday season, but likely for future financial health and job creation in the retail sector. But it also raises a big question: Why are Americans spending so much when they’re so worried about the economy—and about their own economic situations?

At least when it comes spending, Americans’ actions don’t seem to match their fears. In November, even though U.S. consumer confidence ticked up after dropping for three straight months, fears of a possible recession remained high. According to a June 2023 CNBC/Morning Consult survey, the vast majority of Americans express concern about higher prices, with two-thirds of them reporting that they would be cutting back their spending  even on essential items like groceries and gas for the rest of the year. But holiday shopping is a perfect example of discretionary spending—people don’t have to spend money on gifts, decorations and the like to keep a roof over their heads and food on their table. Yet why are most of us are still doing it?

Before we look at the “why,” we need to look at the “what”—that is, what are we spending money on when we do our holiday shopping? More and more frequently, we’re buying items for ourselves, and that’s particularly true among younger Americans. Clear majorities of millennials and Gen Zers were expected to buy gifts for themselves over the long holiday weekend, far more than boomers or Gen Xers.

While the mismatch between Americans’ economic worries and our profligate spending seems illogical, here’s where it starts to make sense: We spend money on what we can spend money on. It gives us a sense of control over our own personal finances when we often feel like so much of our financial life is out of our hands. Much higher mortgage rates coupled with increasing housing prices have made buying a home inaccessible for many. And given the recent run-up in auto prices, a new car might be out of reach too. So for a growing number of folks, particularly less-established people in their 20s and 30s, having kids and moving to the suburbs seems like too high a hurdle to surmount.

But smaller treats like a new tube of lipstick or a nice sweater—or yes, even avocado toast? Those are accessible. While older Americans might roll their eyes at the “treat yo self” mentality, could there be a real logic to it? If my buying power is less than it was a few years back, and if the prospect of achieving the stereotypical American Dream seems to slip further from my grasp with every passing month, then maybe I need to reinvent how I enjoy my life. That can carry over from things I buy for myself to gifts I buy for others: If I can’t buy the house, the car, etc., I can afford a pretty nice holiday for me and my loved ones.

In a way, Americans as a group may be reassessing and redefining what’s elastic and what’s inelastic for us, to put it back in economic terms. Personal enjoyment is something that we’ve come to value greatly—and, honestly, that we’ve come to expect. We spend $700 million annually on Halloween costumes for our pets, for crying out loud. Yet we all complain about the cost of groceries and report that we’re cutting back on what we spend at the supermarket. It’s hard to refute, then, that we live in a land of shifting priorities.

Lest you think I’m too much of a Scrooge, I believe there’s a lot that’s positive going on here. America today is a land of plentiful consumer spending—Americans’ spending is on the rise, even adjusting for inflation. U.S. GDP growth—which came in at a blistering 4.9% last quarter—is being largely fueled by high consumer spending. You could say, then, that consumer spending is what’s driving our economy today, what’s leading economists to now downplay talk of a recession.

So it could be that we’re on the verge of a Christmas miracle: a robust holiday shopping season that flies in the face of economic anxieties, one that boosts retail into an unexpectedly strong 2024. But rather than just Santa, it will be American consumers who will be bringing the cheer this year.

Meanwhile…

What I’m watching: Among my own discretionary spending over the Thanksgiving weekend was a trip to the movies, where I caught director Alexander Payne’s excellent new film “The Holdovers.” Paul Giamatti (who also stars in Payne’s 2004 film “Sideways,” one of my favorite movies) plays a curmudgeonly teacher who gets stuck minding the students who are forced to remain at their Massachusetts boarding school over the holidays in 1970. Over the course of the film, he forges a unique connection with one smart but trouble-making student and the school’s head cook, who has just lost her son in the Vietnam War

.Like Payne’s other films, it’s a sweet, funny and bittersweet flick. But what makes it particularly unique is what it doesn’t do: A movie that could have easily devolved into “we know better now” social commentary on race and class in the hands of a less skilled filmmaker instead stays focused on the development of well-honed characters whom the audience comes to care about as the individuals they are rather than the groups they represent. Definitely check this one out if you get a chance.

What I’m baking: I, like everyone, love a good piece of pie, and so Thanksgiving is a red-letter day for me. I bake a couple every year—I’ve done pumpkin, sweet potato and this personal favorite, a dupe of the amazing maple sugar pie from Quebec dining institution Aux Anciens Canadiens. But this year, I went back stateside for an offbeat entry in the pie pantheon: cranberry pie.

While cranberry is certainly a quintessential Thanksgiving flavor, the berries don’t often make their way to the dessert table. But when you add ginger and orange zest (I also added cinnamon because I like putting it in pretty much every dessert), it really hits the right note. For a day that’s loaded with rich flavors, this pie adds a needed punch of tartness. And it’s full of berries, so it’s healthy, right?

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