Yes, rising U.S. consumer debt levels, combined with other economic pressures, are expected to contribute to slower U.S. holiday spending growth in 2025 compared to previous years. While total nominal spending is projected to hit a record $1 trillion, this growth is expected to be largely driven by inflation rather than increased purchasing volume or improved consumer finances.
Key factors influencing this trend include:
Cautious Consumers: Many Americans (36%) are still carrying debt from the 2024 holiday season, leading to more cautious financial planning for 2025.
Slowing Growth Rate: Forecasts from the National Retail Federation (NRF), Mastercard, and PwC all indicate a slower year-over-year growth rate for holiday sales than in 2024.
Income Disparity: The impact of debt and inflation is not uniform. Lower- and middle-income consumers are expected to pull back the most, with some surveys indicating they plan to spend less per person than last year. Higher-income consumers are expected to remain more resilient in their spending.
Use of Credit and BNPL: A significant portion of shoppers plans to rely on credit cards (50%) or "Buy Now, Pay Later" (BNPL) services to manage expenses, indicating budget constraints and a need to spread out costs rather than abundant disposable income.
Focus on Deals: The increased price sensitivity has led more shoppers to plan their purchases around major sales events like Black Friday and the Thanksgiving weekend to find deals.
Economic
Headwinds: A cooling labor market, rising goods prices due to tariffs, and
general economic uncertainty are all contributing to a more restrained consumer
sentiment.
In summary, while overall retail sales will likely see a nominal increase, high consumer debt is a key indicator of the financial strain that will result in more measured and price-conscious holiday spending behavior across much of the U.S. population in 2025.
Yes, rising U.S. consumer debt is expected to be a factor leading to a slower growth rate in U.S. holiday spending for 2025, with some individual consumers planning to spend less. However, overall holiday retail sales are still projected to reach a record high, surpassing $1 trillion for the first time.
Key points regarding the impact of consumer debt on 2025 holiday spending:
Overall Spending Growth Slows: While total holiday spending is forecast to increase by major retail organizations like the National Retail Federation (NRF), the projected growth rate of 3.7% to 4.2% is smaller than previous years, indicating caution among consumers.
Consumer Behavior Shifts: High debt and economic uncertainty are driving changes in shopping habits. More shoppers are expected to seek deals, shop earlier to spread out expenses, and use value-seeking strategies like "buy now, pay later" (BNPL) services and generic brands.
Income Disparity: The impact of debt is not uniform. Higher-income consumers are expected to maintain or increase their spending, while lower-income individuals are more constrained and likely to pull back.
"Holiday Debt Hangover": Surveys suggest that many Americans are still carrying debt from the previous holiday season, which is shaping their 2025 spending decisions and contributing to a more cautious approach to taking on new debt.
Reliance on Credit: Despite concerns, consumers are increasingly relying on credit to fund purchases, with 84% planning to use credit cards. This suggests that current debt levels may not prevent spending entirely but will lead to more post-holiday financial anxiety and cutbacks in the new year.
In summary, consumer debt is acting as a headwind, leading to more cautious and strategic spending behaviors, but not an overall decline in total holiday spending, which is projected to reach new highs primarily due to factors like real wage growth and continued strength in consumer balance sheets for a significant portion of the population.
https://www.google.com/search?q=will+us+consumer+debt+result+in+lower+us+holiday+spending+2025
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Retail,
Hotel and Restaurant Jobs may decrease in 2025.
Skilled Trade, Construction, Mining, Timber, Engineering, Energy Production and Data Center Jobs should increase in 2026.
Norb Leahy, Dunwoody GA Tea Party Leader
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