Dive Brief:

• Mastercard’s SpendingPulse report predicts that between Nov. 1 and Dec. 24, U.S. retail sales excluding automotive will increase by 3.7% compared to last year. The figure is not adjusted for inflation.
• E-commerce is expected to increase 6.7% year over year, while in-store sales is expected to increase 2.9% from the previous year, according to the report.
• Electronics sales are projected to grow 6% from last year, with the next biggest increase being for restaurant spending (5.4%) and groceries (3.9%). Apparel purchases, however, are only expected to rise by 1%, and jewelry spending could dip by 0.3%, according to the report from the card network company.

Dive Insight:

Judging from the recent Mastercard SpendingPulse report, this year’s holiday season could look slightly different than 2022. Last year, the card giant’s holiday report estimated that consumers would spend 7.1% more than they did during the 2021 holiday season. Plus, the report anticipated a bigger uptick in e-commerce and in-store spending at 4.2% and 7.9%, respectively.

Inflation may have a dampening effect on consumer spending this year. While the rate of inflation has generally begun to cool, it had a slight uptick in August, according to the most recent Consumer Price Index report. The CPI rose 0.6% in August and 0.2% in July. “Over the last 12 months, the all items index increased 3.7 percent before seasonal adjustment,” the report said.

Meanwhile, the Federal Reserve announced Wednesday that it will pause its interest rate increases, at least for now, and hold the federal funds rate between 5.25% and 5.5%.

In its report, Mastercard noted that the state of the economy, particularly the labor market, household savings and consumer access to credit will play a role in consumer spending during the upcoming holiday season. Inflation and interest rates could also shed light on what products consumers may buy over the holidays, according to the report. 

“While the consumer of holidays past may have been a consumer trying to find footing in a rapidly shifting economy, the consumer of holidays present has taken their power back,” Michelle Meyer, U.S. chief economist at the Mastercard Economics Institute, said in a statement. “We expect these individuals to impressively navigate the holiday season, making choices and trade-offs that best suit their lifestyles.”