Happy Thanksgiving!

I don’t know about you but I’m finding myself to be more of a traditionalist these days. I like my holiday season evenly distributed with each holiday given it’s due. So I balk when Christmas decorations start popping up before Halloween and Thanksgiving sort of floats in between. And when Black Friday and Cyber Monday deals start showing up in my inbox weeks ahead of schedule, it throws me off. If these are early deals, shouldn’t I just wait for even better prices after Thanksgiving? But as with so much these days, all this seems subject to wide interpretation and is mostly about marketing anyway. Gosh, I’m feeling grumpy this morning…

Another traditional part of the holidays is people forecasting how much consumers might spend during the shopping season. This, too, is subject to opinion and perspective but consumers are, on average, expected to spend a record amount as they hit the malls, online retailers, and the nation’s roads and airports. The TSA is predicting a record year for Thanksgiving week travel, for example. Easing inflation has helped, along with a strong wealth effect from increased asset prices.Given that consumer spending has accounted for roughly 80% of GDP growth this year, more spending is a good sign for our economy, even when viewed through the tempered lens below. I’ll again lean on a quick summary and chart from JPMorgan this week that illustrates this point.

Besides that, I’d like to take a moment to wish you and yours a wonderful Thanksgiving. This is one of my favorite holidays. Family and friends come together in gratitude and appreciation for, well, everything. There’s good food and drink, and perhaps discussions stretching beyond politics. Enjoy!

From JPMorgan…

This Thanksgiving, as families gather around the table, the festivities provide a welcome reprieve from the political tensions of recent months. With Americans expected to spend nearly a trillion dollars spreading holiday cheer, this spending showcases their resilience in a shifting economic landscape.

While holiday spending is projected by the National Retail Federation to hit a record high, sales growth, as shown by the chart of the week, is expected to fall slightly below the pre-pandemic average of 3.6%. However, this moderation reflects easing inflation rather than weakening demand. In fact, when adjusted for inflation, real sales are set to exceed last year, buoyed by record shopper turnout and an anticipated rise in per-person spending to around $900. Driving this is real wage growth, which has remained positive for a year and a half. Furthermore, stock market gains and recent Fed rate cuts have lifted consumer confidence. That said, elevated prices, along with the depletion of pandemic era savings cushions, may cap spending growth for some households.

Retailers, for whom the holiday season drives a disproportionate share of annual sales, face a mixed outlook. Deal hunting consumers are turning to discount retailers, boosting revenue and profit forecasts. Conversely, those reliant on discretionary categories like apparel and specialty goods are seeing softer demand as shoppers focus on essentials.

Despite challenges, this season reflects a broader economic trend: slowing but not stalling. As winter sets in, consumer spending is cooling but remains far from frosty—underscoring the resilience of the U.S. economy as we head into 2025.

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