Increased consumer spending is generally associated with increased employment and low unemployment rates.
Employment in October is still 2.6 million below pre-COVID levels, but an average of 561,000 jobs were added in each month of this year. And the U.S. unemployment rate fell to 4.6% after peaking at 14.8% in April 2020.
Another factor that will help fuel spending this holiday season is rising house prices, the soaring stock market and increasing household wealth.
Despite its ups and downs, the S&P 500 has gained more than 20% this year. According to a Federal Reserve report, US household wealth hit a record $ 136.9 trillion at the end of March, the latest figures available.
And consumers probably have money to spend. The same Fed report showed cash balances, checking accounts and savings deposits increased by $ 850 billion in the first quarter to a record high of $ 14.5 trillion.
Consumer spending rose at a double-digit rate from March to September compared to the same months a year ago. The latest report for September shows retail sales are up 13.8% from a year ago.
If supply chain issues cause product shortages as expected, gift card sales could increase during the holiday season, potentially reducing holiday season sales as gift cards are not available. not included in retail sales until card is in use.