Retailers are concerned about the mood of shoppers during the holiday season

Christina Beck is approaching this holiday season with caution.

Mrs. Beck, a 58-year-old school administrative director, makes a list of gifts she wants to buy for her family and friends and sticks to it. But her expenses this year will be kept in check by the high cost of food at grocery stores and restaurants, and the mortgage on a house in Minneapolis she bought with her best friend last year.

That best friend, Kristin Aitchison, can’t wait for the holidays. Mrs Aitchison, 55, who works for a care home, tells her family every year that she plans to make the holidays smaller and spend less. And every year she spends more than the year before.

“I’m a huge gift giver,” Ms Aitchison, who started shopping in early November. “I have so much fun giving gifts. The last week before Christmas I’m always running around because I have to find a few presents.”

There are many reasons why people should be more careful with their holiday spending this year. Although inflation is slower than a year ago, millions of shoppers are still feeling sticker shock when buying groceries. Federal student loan payments, which were suspended during the pandemic, have resumed. And higher interest rates have led to higher credit card bills and, for home buyers, mortgage payments.

Still, consumer spending has been surprisingly strong in 2023. For retailers, the question is whether people will stick around for the holidays or decide this is the time to pull back.

Predictions are murky. The National Retail Federation said it expected holiday sales to rise 3 to 4 percent from last year without adjusting for inflation, similar to the pre-pandemic 2019 season. But a survey by the Conference Board, a research group non-profit, shows that consumers planned to spend an average of €0.50 $985 in holiday-related items this year, slightly less than the $1,006 they expected last year.

A closely watched early indicator, Amazon’s Prime Day in October, showed consumers spending more, but only slightly. They spent an average of $144.53 on Prime Day, up 2 percent from the average the year before, according to Facteus, which analyzed credit and debit card transaction data.

Last week, the Commerce Department reported that retail sales nationwide fell 0.1 percent in October from September, the first decline since March. Executives at Walmart also warned that consumer spending had weakened over the last two weeks of October, noting that people appeared to be waiting for sales.

“It makes us more cautious on the consumer side as we look into the fourth quarter,” Walmart Chief Financial Officer John David Rainey said in an interview. “I think there’s probably more variation in the numbers.”

However, there was a decline in retail sales smaller than the decrease that many economists had expected after a very strong summer of spending, and some analysts saw it as a sign of continued consumer resilience.

Holiday sales are likely to be decent by pre-pandemic standards, but not as strong as during the gangbuster seasons of 2020 and 2021, said Tim Quinlan, a senior economist at Wells Fargo.

Higher-income shoppers have still built up plenty of extra savings during and after the pandemic, but lower-income people have used up their resources more fully, Mr. Quinlan said. Higher interest rates may also deter shoppers from putting holiday purchases on credit cards. The combination of lower savings and higher rates “makes it harder to have a big pile of presents under the tree this year,” he said.

For much of the year, consumer spending was supported by continued strength in the labor market and wage increases. The average hourly wage increased in October 4.1 percent from a year earlier. That was faster than inflation. As measured by the Consumer price index, prices rose by 3.2 percent.

Yet signs of slowdown are beginning to emerge. Wage growth is slowing and unemployment has risen in recent months. Like Mr. Quinlan, many economists think consumers are getting closer to depleting their savings, some surveys show to suggest that many have only slowly exhausted their financial buffers.

For many, the resumption of student loan payments is putting a damper on holiday spending plans. In a holiday research According to consulting firm Deloitte, 17 percent of respondents said they had to resume making student loan payments, and nearly half of them said they planned to reduce their holiday spending as a result.

In recent years, Tara Cavanaugh, a 37-year-old marketing executive, has spent as much as $1,500 on gifts for her family, friends and various office parties, she said. This year, after moving with her partner to Boulder, Colorado, and resuming her $400-a-month student loan payments — her partner also has student loan debt — she said she was winding down her gift list and expected to get closer at the $200 to spend.

“We both earn a decent income and live simply. We share an old car and our furniture is still from Ikea, but it still feels like we are struggling,” Ms. Cavanaugh said of her and her partner. “I know a lot of us are feeling pinched, so I’m not going to panic about giving gifts to people who are older than me, are doing well and don’t need anything.”

As always, many people are looking for deals, both on Black Friday and during other pre-Christmas sales. About 52 percent of consumers plan to look for deals and specials online this year and 39 percent plan to hunt for bargains in stores this year, according to a survey by research firm Forrester.

When the Amazon toy catalog arrived in Claire Kielich’s mailbox in Austin, Texas, her two daughters, ages 5 and 10, who also have birthdays in December, started circling what they wanted.

“I’ll see if any of those things are on sale on Black Friday,” said Ms. Kielich, 40, who works in product development and purchasing in the furniture industry. She said she expected to spend about $1,000 this holiday season and already had a stash of stocking stuffers stashed in one of her closets.

Ms. Beck in Minneapolis started shopping for holiday gifts in July, making lists of what friends and family needed or liked, buying unique items from local craft stores or small local businesses and storing them in what she called her “gift drawer.” ‘ mentions. This approach, she says, helps her think more about her gifts and keeps her from spending outside her budget.

Her best friend, Mrs. Aitchison, takes the opposite approach. Although she is careful with her finances all year round, come the holidays, she has no plan and essentially no budget. Her eldest child has stopped her from ever buying him corduroy trousers again. Last year she bought four 10-foot-tall blow-up dinosaur costumes for her adult children.

“Of course, no one needs a blown-up dinosaur costume,” Ms Aitchison admitted.

This holiday season, she plans to shop ’til she drops.

“I don’t think about what I’m going to spend,” she said. “Because I have spent all my money, I eat beans and rice in January and February while paying the bills.”

Despite their different holiday shopping styles, Ms Aitchison said she and Ms Beck always enjoyed shopping together.

“She doesn’t understand nearly as many things as I do,” Mrs. Aitchison said. “She always says, ‘Kristin, stop.’ Put that down. You don’t need it. ”