Consumer spending during the 2022 holiday season is projected to rise by 7.1%, according to Mastercard’s latest SpendingPulse data shows.
Mastercard predicts that consumers will spend 4.2% more shopping online and 7.9% higher than last year. More specifically, consumers are expected to spend 4.6% more on clothing, followed by luxury products (4.4%), electronics (3.5%), and jewelry (2.2%).
The projected increase in spending bears good news for retailers, who have seen their customers reign in their discretionary expenses due to rising inflation and fears of recession.
“New job creation, rising wages, and lingering savings should have many consumers ready and able to spend,” said Michelle Meyer, U.S. chief economist at the Mastercard Economics Institute.
This year’s holiday season will also see a shift in consumers’ preference for shopping methods and the types of gifts they buy. More consumers are going to return to shopping in physical stores for doorbuster deals and unique retail collaborations, with in-store retail sales expected to rise by 7.9% year over year. And as more consumers return to shopping in physical stores, they are likely to buy fashion-forward products as social events have many feeling the need to dress to impress — a shift from the last two years when consumers were largely buying loungewear and athleisure.
That is not to say that consumers will open up their wallets carefree. According to Mastercard, bargain hunting will be in full force this holiday season, with more consumers looking for deals, discounts, price matching, and monitoring.
“This holiday season, consumers may find themselves looking for ways to navigate the inflationary environment – from searching for deals to making trade-offs that allow for extra room in their gift-giving budgets,” Meyer said.
Much like last year, this year’s holiday season is projected to start earlier, with retailers offering early shopping discounts instead of waiting for Black Friday. Still, Black Friday and Christmas Eve are going to make for the top sales days of the year.