There is some fresh data from the big credit card companies — certainly fresher than the delayed government data that’s been coming out. According to the data, holiday spending is indeed strong: Up 3.9% according to Mastercard and 4.2% according to Visa.
This year consumers started their holiday shopping earlier than usual. And that can signal excitement or anxiety. Or maybe both.
“My sense is it’s probably a combination of factors,” said Michelle Meyer, chief economist at the Mastercard Economics Institute.
What she means is, two things can be true at the same time. The boost in sales may show people are eager to spend and eager to save.
“Consumers may have said, ‘you know what, let me try to get the product that I know I want, get the gift that I know I need to have, and attempt to do it at the best price,’ which means to be engaged in the season earlier,” Meyer said.
Mixed feelings in a mixed economy are reflected in the mix of categories performing well. Sales of electronics are up nearly 6% according to Visa, which screams spend. Dining out is up more than 5% according to Mastercard. Again, spend. Meanwhile, Mastercard says apparel sales are up nearly 8%. Jessica Ramirez, co-founder of the advisory firm The Consumer Collective, is labeling some of that one as save.
“Consumers looking for like t-shirts and underwear and things of that nature so core basics,” she said.
Ramirez said her surveys show a lot of people looked to replace essentials while they were on sale.
David Swartz, a senior equity analyst at Morningstar, said the gap in the economy is growing. While upper income Americans shell out for Coach bags and luxurious face creams, lower earners are increasingly funding the holidays with credit card and buy now pay later debt.
“It does appear that a lot of consumers continue to spend money that they may not exactly have,” he said.
The question is if it’s debt they’ll quickly pay off. And if everyone else will keep spending and juicing the economy.
“You can never be sure until the season’s over,” Swartz said.
Data coming over the next few months will be the true test of how consumers feel.
