Christmas sweaters will be all the rage this holiday season as many shoppers reported plans to spend more on clothing this year versus last, according to the latest Consumer Snapshot from GlobalData Retail.
“Notably, holiday apparel is a winner this year, with 47.1% of shoppers saying they will spend more on clothing for the festive season than they did last year,” Neil Saunders, GlobalData Retails’ managing director, said in a note. “This caps a good year for apparel.”
Overall, the strong economy has consumers feeling confident, with 59.3% of respondents saying their personal finances are in better shape compared with this time last year. More than half (52.2%) say they feel good or very good about the extra expense of the holidays, with 51.8% saying they’ll spend more or a lot more than 2017.
The GlobalData findings would support the National Retail Federation forecast for total holiday season sales growth of 4.3% to 4.8%.
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Holiday spending data from PwC found that consumers will spend 5% more this holiday period, with 84% prepared to spend as much or more this holiday season compared with last year. That’s an average of $1,250 including gifts, travel and entertainment.
High-earning shoppers will spend three times as much on travel as all consumers, according to PwC. And high-earning millennials, which have annual household incomes of $70,000 or more, will spend an average $2,021 this holiday season, more than double the $839 anticipated spend of millennials with annual household incomes below that $70,000 threshold.
An overwhelming majority, 80%, of high-earning millennials are Amazon.com Inc. AMZN, +0.32% Prime members.
This group may use that membership to buy matching Christmas sweaters with their dogs and cats. The PwC data shows that high-earning millennials plan to spend 8% of their holiday budget, $183, on gifts for their pets.
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Still, all of this doesn’t add up to spendthrifty consumers.
“We expect the U.S. consumer to behave in an eminently rational manner in the face of the recent imposition of a 10% tax on 5,745 individual goods imported from China valued at $20 billion,” wrote Joe Brusuelas, chief economist at RSM, which provides audit, tax and consulting services for the middle market.
“Moreover, given a push by the current administration to boost that tax to 25% in January, as well as potentially impose an additional 25% tax on an unnamed number of goods valued at $267 billion, it is likely American consumers will pull a good bit of consumption and economic activity forward into the final quarter of 2018,” Brusuelas said.
This could lead to declining activity in the quarters that follow. Brusuelas asks, “Are we understating the likely behavior by U.S. consumers conditioned to falling prices over the past three decades to a sudden price shock on core consumers?”
Walmart Inc. WMT, +2.52% , Target Corp. TGT, +0.30% , and others have warned that tariffs will hurt business and spending activity.
Don’t miss: Walmart, Target warn that tariffs will raise prices and hurt families
The SPDR S&P Retail ETF XRT, +0.00% has gained 18% over the past year, the Amplify Online Retail ETF IBUY, -1.02% has rallied 28.2%, and the S&P 500 index SPX, -0.14% is up 13% for the period.
