A person picks up a purse in Macy's department store during a Black Friday sale in New York City. — Reuters

US shoppers are flocking to stores this holiday season, but the festive mood is dampened by lingering inflationary pressures. After experiencing sticker shock during the pandemic, consumers are now dealing with broadly elevated prices that have stopped rising rapidly but remain high. The Conference Board reported that Americans are "ready to open their wallets this holiday season," ahead of Black Friday, which this year falls on November 28. Traditionally, this day marks the start of the Christmas shopping season with steep discounts.

"US consumers plan to spend more than last year, but inflation reduces how far their dollars can go," the report noted. In this environment, shoppers are not expected to pay full price for items. Morgan Stanley's survey found that 35 percent of consumers plan to spend more this holiday season, but nearly two-thirds would skip a purchase if an item is not adequately discounted, requiring a price cut of more than 20 percent.

Neil Saunders of GlobalData predicted, "It's gonna be a good year, but I don't think that growth is going to be spectacular because consumers are still under pressure." Inflation remains above the Federal Reserve's two percent long-term target, rising to 2.6 percent in October from 2.4 percent in September, but significantly below the peak of 9.1 percent in June 2022. Other economic data, such as low unemployment at 4.1 percent and a preliminary GDP reading of 2.8 percent for the third quarter, has been solid.

However, Joe Biden's presidency has coincided with a 20 percent rise in consumer prices due to Covid-19 pandemic lockdowns and supply chain bottlenecks. This inflation played a central role in the 2024 US presidential election, with Republican Donald Trump defeating Biden's appointed Democratic successor, Vice President Kamala Harris. Saunders noted, "There is still a perception among consumers that things are quite difficult, so people are being quite cautious and careful in their spending."

The impact of Trump's looming presidency on inflation remains uncertain. Industry groups have warned that tariffs favored by the Republican could reignite pricing pressures. The National Retail Federation projected that a Trump tariff proposal could dent US consumer budgets by as much as $78 billion annually. Despite potential trade actions, tariffs are not on consumer radars for the 2024 season, according to Saunders.

One challenge this year is the shortness of the season. Black Friday falls on November 29, the latest possible date, shortening the stretch between Thanksgiving and Christmas. However, the impact on 2024 sales should not be overstated, as retailers have pulled the holiday shopping season forward, with some vendors launching online "Black Friday" promotions as early as October. Among the companies that have already begun discounts are Walmart, Target, Best Buy, and Home Depot. Amazon officially launched "Black Friday Week" on Thursday.

The NRF has projected holiday spending growth of between 2.5 and 3.5 percent in the 2024 season compared to the year-ago period, reaching up to $989 billion over the two-month period. Economists with the trade group have pointed to an easing of gasoline prices as a supportive factor. Online sales are projected to grow as much as nine percent this season, continuing a long-term trend. Black Friday has become a significant occasion for online shopping, along with "Cyber Monday" three days later.

Saunders noted, "Over time, we've moved from a period where it was just Black Friday, and maybe a little of the weekend, to it being a period of discounting that starts very early. It's seasonal discounts." There has been a reduction in "doorbuster" sales that draw large crowds, sometimes resulting in injury. Instead, more consumers are spreading out their purchases or opting to shop online for Black Friday promotions.

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