Average Cost of American Holiday Spending

The winter holiday shopping season typically begins in the fall for many consumers. The basic theme remains the same: Shoppers feverishly continue to try to find the perfect meaningful gifts for everyone on their list. 

From the shopping frenzies of Black Friday and Cyber Monday to the last-minute sales just before the actual holidays happen, the American commercialization of the holidays plays a big part in how much the average American pays for all their holiday expenses. This ranges over Thanksgiving, Christmas, Hanukkah, and Kwanzaa.

With gifts, parties, decorations, and high inflation, the holiday season in America is becoming more expensive. Below is a look at the average cost of the American holiday season and why the cost is steadily rising.

Planned Winter Holiday Spending for 2023

Holiday retail sales in November and December 2023 are expected to grow 3% to 4% to a new record of between $957.3 billion and $966.6 billion. That's a jump from the $929.5 billion record set in 2022. Prior to this, sales averaged an increase of 3.6% from 2010 to 2019, according to the National Retail Federation (NRF).

The top four gift categories consumers plan to spend on are:

• Gift cards (55%)
• Clothing or accessories (49%)
• Books, video games, or other media (28%)
• Personal care or beauty items (25%)

Many of these gifts will be purchased over Thanksgiving weekend by a record-estimated 182 million shoppers. This is 15.7 million more people than in 2022 and is the highest estimate since NRF began tracking this data in 2017.

NRF expects online and other non-store sales to increase between 7% and 9% to between $$273.7 billion and $278.8 billion over the holidays. This figure is up from $255.8 billion in 2022, which saw significant growth in digital channels during the pandemic. as consumers turned to online shopping to meet their holiday needs during the pandemic.

Spending in Line with 5-Year Average

The National Retail Federation expects consumers to spend $42 more on an individual basis in 2023 compared to 2022. That's an estimated $875 per person in 2023 versus the $833 spent the year before. This figure is in line with the five-year average of $866. Of the $875 people expect to spend, the NRF said $620 will likely be used to purchase gifts while the remainder will be set aside for seasonal items.

Holiday sales are expected to revert back to pre-pandemic levels even with a slower growth rate of 3% to 4%. More people are expected to shop online and through what the NRF calls non-stores. Total sales are expected to range between $273.7 billion and $278.8 billion, which is higher than the 2022 figure of $255.8 billion.

“Consumers remain in the driver’s seat, and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” the NRF's chief economist Jack Kleinhenz said.

The boost in spending is also expected to impact the economy with as many as 450,000 seasonal workers securing employment during the season.

The Impact of Inflation on Spending

Higher prices and inflation continue to weigh on the minds of consumers. Many shoppers plan to start spending as early as November on their holiday shopping. About 60% of those surveyed by the NRF indicated they would do so to help keep their budget intact while 41% of shoppers said they didn't want to pass up the lower prices and major promotions offered by retailers.

Real gross domestic product (GDP) increased by 4.9% in the third quarter of 2023. This figure was largely due to increases in consumer spending along with investment in private inventory, government spending, exports, and residential investments.

The PCE price index increased 3.4% (3.7% excluding food and energy) in September 2023 from one month a year ago. Because the PCE considers the substitution of one (lower-priced) product for another, it helps explain increased consumer spending in an inflated market.

Travel Plans

The picture of who expects to travel and how much is mixed. It's either slightly up or down noticeably. According to the Thanksgiving Travel Survey from The Vacationer, nearly 117 million U.S. residents plan to travel for Thanksgiving in 2023, which is a slight bump from last year's 112 million. As many as 131 million say they plan to travel for the December holidays.

A Deloitte survey indicated that travel is expected to be busy during the 2023 holiday season. This is thanks, in part, to fewer concerns over finances and health concerns that prevented people from traveling during the pandemic. Almost half of the people surveyed (48%) said they planned to travel during the holidays—led primarily by Baby Boomers.

The Bottom Line

Americans’ actual spending increased each holiday season since 2010, and that tradition is expected to continue in 2023. Holiday retail sales are expected to grow 3% to 4% over 2022's record sales, reaching a new record. More people are expected to spend more individually compared to previous years while travel is supposed to rise. Of course, we won’t know how much people actually spend until the holiday season is over. Stay tuned.