To say the past few years have been difficult would be an understatement, but it could have been worse. Even though the pandemic situation improved in 2022, we faced other challenges, but it really could have been worse. 2022 has been a year of inflation, an ongoing pandemic, supply chain issues, and many other challenges, but again, it could have been worse. Despite the many challenges, our economy remained robust, jobs were abundant and consumers did not relax their consumption of goods and services. Inflation has not slowed our consumption, nor have high interest rates or anything else that would appear to be dampening consumer confidence and spending.
We continue to spend, even though we complain about rising prices and rising interest rates. Yes, we keep complaining, but we keep spending. Even as gasoline prices soared, consumers moaned and moaned, but that didn’t dampen their spending. Why? Because there was an abundance of jobs, people were working and they had money to spend. We only buy what we can afford, especially if we can “buy now, pay later” or simply have the funds to purchase the item. We all know that having funds does not mean real money, because most buy on credit.
Demand is affected by expectations, so the expectation of better economic conditions usually leads to an increase in demand. Again this week, a Conference Board survey indicated that consumers had a more favorable view of the economy and employment. Consumer confidence was strongest in the Conference Board’s Consumer Confidence Index after monthly declines in November and October. The index rose significantly from November through December, even as we finished Thanksgiving and were well into our holiday shopping, mhlnews.com reported.
So, have consumers spent more or less during this inflationary holiday season? Even with still fairly high inflation and higher interest rates, consumer spending hasn’t slowed, nor have our complains and complaints about prices. Personally, I intensified my stomach pains about the higher prices, when shopping, but it didn’t significantly diminish my demand. Of course, lower gas prices and numerous rebates offered by retailers further stimulated spending. Yes, we keep complaining, but we keep spending! A recent headline from USA Today reads, “$9.12 Billion Spent in One Day: New Black Friday Online Spending Record Set in 2022, Report Says.”
According to the article’s author, Mike Snider, “Online shoppers didn’t let worries about higher prices or a recession keep them from a record Black Friday. Consumers spent a record $9.12 billion while shopping online Friday, according to Adobe Analytics. This is 2.3% above the record set in 2020.
So, after observing (and not contributing to) Black Friday shopping, I wondered what Christmas spending would look like. Although final figures are not yet known, according to Forbes, the National Retail Federation expects holiday sales, including online sales, to increase 6% to 8% in 2022, from 13.5 % one year ago. Adobe Analytics expected total holiday online sales (November 1 through December 31) to rise 2.5%, a smaller jump than last year’s 8.6% increase, but a jump nonetheless, despite our complaints about inflation.
According to a Forbes article by Jia Wertz, “Overall, holiday sales grew 7.6% this year, a slower pace than the 8.5% increase in 2021. However, Mastercard SpendingPulse predicted an increase by 7.1%, so the results turned out to be better than expected.”
Consumers seem so resilient and retailers so fanciful that many continue to shop due to the many deals and the fact that they have jobs and can just afford to spend money on any number of products. The final holiday sales numbers aren’t all out yet, so we’ll have to wait and see how it all pans out. I suspect the prices, as expected, haven’t slowed our shopping, but it only increases our complaints, as we continue to shop. I know I’m not going to stop complaining about these high prices, but it really could have been worse.
Kojo Quartey is president of Monroe County Community College and an economist.