(Marketwatch) Holiday season excitement is setting in, but so is consumer alarm about the possibility of an economic recession, which could derail the end-of-year shopping season.
Shopper outlook for the U.S. economy in 2020 is the weakest it has been in eight years, according to the 2019 Holiday Survey of Consumers conducted by Deloitte. Nearly half of respondents (44%) see the economy weakening significantly or modestly in the coming year. In 2011, 37% felt the same.
Conference Board data released on Tuesday showed that consumer confidence fell in November, the fourth month in a row, over concerns about the labor market, though Americans were still upbeat about the holiday season.
“While the macroeconomic indicators continue to be strong many retailers are holding their breath and there’s a tremendous amount of caution in the marketplace,” said Steve Barr, consumer markets leader at PwC.
In addition to the labor market, Barr says consumer debt could give shoppers pause.
“Right now, interest rates are low, but if there’s any event, macroeconomic or geopolitical, to burst the balloon, the downstream consequence would be bigger than usual because we’ve been on a solid run for years,” he said.
Already, there has been anxiety among retailers about the short shopping season, which has six fewer days this year versus 2018.
Walmart Inc. launched holiday deals before Halloween.
“The fact that we’re seeing leading retailers release deals even earlier is an indicator of some level of concern about whether the shopper will be impacted in a negative way in the coming weeks,” said Barr.
With unemployment low, wages rising and other upbeat economic metrics, experts including Deloitte think spending growth will continue.
Online shoppers have already spent $50.1 billion between Nov. 1 and Nov. 26, up 15% year-over-year, according to Adobe Analytics. Seven days have surpassed $2 billion in sales, with online sales forecast to reach $4.4 billion on Thanksgiving and $7.5 billion on Black Friday.
On Thanksgiving day, Adobe Analytics expects even deeper discounts on items like televisions and computers, which have already experienced more than 10% price reductions, even before the big shopping weekend.
Adobe forecasts $143.7 billion in online shopping between November and December, and experts like the National Retail Federation expect overall sales growth in the 4% range despite uncertainty and unease about the news from Washington D.C.
While shoppers have continued to spend, analysts note some apprehension. Shoppers have become “a bit more careful and subdued in their buying habits” and are taking more time to make a purchase, says Neil Saunders, managing director at GlobalData Retail.
“Our data show that consumers are more reticent to buy big-ticket items now than they were at the start of this year,” Saunders wrote in a note published Tuesday following Best Buy Co. Inc.’s earnings announcement.
