As he was starting his literary career, Charles Dickens was a journalist. Alas, he was not a business reporter — that would have been too appropriate for the son of a debtors’ prison inmate.
Yet, Dickens would appreciate the plot developing for the American consumer as the holiday spending season begins in the week ahead.
Choose your favorite Dicksenian novel. It likely is an apt theme for the weeks ahead for shoppers, investors and the economy.
A Tale of Two, um, retailers. Walmart and Target both reported third quarter results last week. Where Target warned of a consumer growing increasingly frugal and slowing sales, Walmart is attracting more price-conscious shoppers. The world’s largest retailer said three-quarters of its big jump in grocery sales came from households making over $100,000 a year browsing its food aisles. Target, meantime, witnessed what it called a “precipitous decline” of shoppers’ appetites as the holiday season approached.
Great expectations suitably describe the forecast for holiday buying. The National Retail Federation thinks holiday sales will grow by almost twice its normal rate. Consumers have been taking on plenty of debt, especially on their credit cards, as inflation has dragged on and settled into household budgets.
The Ghost of Christmas Past haunts this season. The past two years have seen shoppers unchain their spending, flush with stimulus checks and pandemic savings. The present will be more moderate, but certainly not the forced thrift during the Great Recession years. As this shopping season kicks off on Friday in the week ahead, shoppers are in decent spirits thanks to the low unemployment rate, falling gasoline prices and rising wages. Still, the persistent inflation will mute the volume of holiday spending in the Christmas Yet to Come.
Dickens often required his characters to navigate a world indifferent to their circumstances. That’s certainly true for investors, too, as the story of the American consumer unveils itself this holiday season.
