Strong Q3 GDP growth and record-breaking Cyber Week sales show consumer spending remains strong

The trend line: A growing number of holiday metrics are headed in a positive direction.

  • Consumers are feeling (slightly) better. Consumer confidence ticked up in November after three straight monthly declines, per the The Confidence Board.
  • More of them are shopping. A record 200.4 million consumers shopped over the Cyber Five holiday weekend from Thanksgiving Day through Cyber Monday, up 1.9% year-over-year (YoY), per a survey by the National Retail Federation (NRF) and Prosper Insights & Analytics. Notably, the number who visited a store fell 1.1%, while the number who shopped online grew 3.1%.
  • Sales are up. Consumer spending set records on Black Friday, across the Cyber Five, and throughout the first 27 days of November, with significant growth online (and far more modest gains offline). Overall US retail sales (excluding automotive) grew 2.5% YoY on Black Friday, with in-store sales increasing just 1.1% YoY and ecommerce sales rising 8.5% YoY, per Mastercard SpendingPulse. Adobe Analytics reported an online sales gain of 7.8% YoY over the Cyber Five, and 7.3% YoY from November 1-27.
  • Growth stemmed from volume gains, not inflation. Salesforce found Cyber Five growth was primarily driven by order volume, rather than inflation, which drove most of last year’s gains.

A good economy: Consumer spending patterns reflect the ongoing disconnect between reality and the prevailing narrative around the economy. While 96% of US consumers report being concerned about the current state of the economy, per a recent report by Intuit Credit Karma, actual data suggest the economy is in a healthy spot.

  • The US economy headed into the holiday season in a strong position. The US gross domestic product grew at a 5.2% annualized pace in Q3, revised up from the strong 4.9% growth reported last month, per the US Bureau of Economic Analysis (BEA).
  • Inflation is cooling. The core personal consumption expenditures (PCE) price index, which strips out food and energy costs, decelerated to 2.3% in Q3 (a downward revision 0.1 percentage point from the initial report). That’s down from 3.7% in Q2 and 5.0% a year earlier. Including those two volatile categories, PCE rose 2.8% (a downward revision of 0.1 percentage point).
  • Consumers have money to spend. Disposable personal income increased 2.9% in Q3 to $144.0 billion, an upward revision of $48.2 billion from the previous estimate. Real disposable personal income increased 0.1 percent, an upward revision of 1.1 percentage points.

The big takeaway: With NRF reporting 55% of Thanksgiving weekend shopping driven by sales and promotions (up from 52% last year), it’s clear that consumers are on the hunt for a deal and retailers that can deliver will see strong gains.

  • Already a few merchants, including both Amazon and Foot Locker, have reported strong starts to their seasons.

Go further: Read our Holiday Shopping 2023 report.

First Published on Nov 29, 2023

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