Fox Poll finds shocking number of Americans will spend less this holiday season

Key Concepts

• Consumer Spending Trends: Analysis of current consumer behavior, particularly during the holiday season, with a focus on differing spending patterns between income groups.
• Economic Environment: Discussion of factors influencing consumer confidence and spending, including job market sentiment, inflation, and wage growth.
• Promotional Shopping: The increasing trend of early and extended sales events, driven by a shorter holiday shopping window and consumer anticipation of deals.
• Wage Growth vs. Inflation: The critical relationship between wage increases and the rate of inflation, and what is needed for consumers to feel financially secure.
• Affordability Agenda: Political focus on lowering prices and improving economic conditions for consumers, with specific examples of price reductions.
• Retail Performance: Insights into the performance of various retail sectors, with a particular emphasis on discount retailers.

Consumer Spending and Economic Environment

The current economic landscape presents a dichotomy in consumer behavior. While the top 10% of American consumers are expected to continue spending robustly, driving a significant portion of the U.S. economy, the lower-income segment is exhibiting caution. This is attributed to a perceived softening in the job market, leading to uncertainty about their ability to spend as much as they would like. Despite having higher discretionary income due to reduced spending on major purchases like homes and cars, these consumers are holding back, waiting for sales. This trend is expected to result in more promotional shopping occurring in the last two weeks of the holiday season compared to previous years.

Early and Extended Holiday Promotions

The start of Black Friday sales has been notably earlier than in previous years, with promotions observed as early as October. This phenomenon is driven by a shortened holiday shopping season, which now typically spans around 25 days compared to the historical 30-35 days. Retailers are extending their sales periods, and it is anticipated that promotional activities will continue until December 24th. This strategy aims to capture consumer spending within the compressed timeframe.

Wage Growth and Consumer Comfort

For the lower-income consumer to achieve a more comfortable financial standing, wage growth needs to outpace inflation. While there has been a roughly 1% uptick in wage growth over the past year, this is not sufficient to significantly improve their financial situation. The Personal Consumption Expenditures (PCE) rate, currently at 4.5-4.6%, needs to be consistently higher than inflation by a spread of two to three percentage points. Indications suggest this could materialize in the spring of 2026, supported by a strong market performance.

Affordability Agenda and Price Reductions

The "affordability agenda" is a key focus, with efforts to lower prices and improve the economic standing of American consumers. Specific examples cited include:

• Walmart: Announced a 25% reduction in the cost of their standard Thanksgiving meal compared to the previous year.
• USDA Data:
  • Thanksgiving turkey prices are down 33% from their "Biden era highs."
  • Potato prices have decreased by 13%.
  • Ham prices are down 15% compared to last Thanksgiving.

These figures indicate a return to price levels not seen in a considerable time.

State of the American Consumer and Retail Performance

Despite some price reductions, certain economic elements have not yet returned to a level consumers perceive as secure. While gas and utility prices are stabilizing, rent and housing occupancy costs remain high. However, the overall economic picture is improving, with expectations that prices for American consumers will be significantly better by the spring of 2026. Retailers are reflecting this positive outlook. Walmart is leading the way, but other retailers such as TJX, Macy's, and The Gap are also showing positive signs, which bodes well for consumers in 2026. Discount retailers, in particular, have demonstrated strong performance.

Conclusion

The holiday shopping season is characterized by a bifurcated consumer market, with higher-income individuals spending more while lower-income consumers remain cautious due to economic uncertainties and the need for wage growth to outpace inflation. Retailers are responding with extended and early promotions to capture spending within a shorter holiday window. While some costs remain high, there are positive indicators of price stabilization and potential improvements in affordability by spring 2026, supported by a strong market and the performance of key retailers.