US Year-End Shopping Season, but Concerns Over Consumer Slowdown Due to High Interest Rates and Inflation

Fed Tightening Cumulative Effect Expected to Slightly Increase Consumption

The U.S. retail industry has entered the year-end shopping season starting with 'Black Friday,' but there are forecasts that consumer sentiment will struggle to revive due to high interest rates and inflation.

On the 23rd (local time), The New York Times (NYT) reported that the perceived inflation remains high, and the burden of credit card and mortgage loans is increasing due to interest rate hikes.

In the U.S., the shopping season is considered to run from Black Friday, the day after Thanksgiving (this year November 24), through Christmas and the year-end holiday period. However, this year-end is expected to see consumer spending fall short of previous years due to the cumulative tightening effects of the Federal Reserve (Fed).

The National Retail Federation (NRF) forecasted that the increase in consumer spending during this year’s shopping season will be only 3-4% compared to the same period last year, the lowest level in the past five years. Sales from Amazon’s 'Prime Day' discount event last month, which can gauge retail conditions, also increased by only 2% compared to a year ago.

The slowdown in U.S. consumer spending is also confirmed by economic indicators. The U.S. Department of Commerce announced that retail sales in October decreased by 0.1% compared to the previous month, marking the first contraction since March. The previously strong wage growth supporting U.S. consumption has weakened, and rising unemployment rates are also cited as reasons why Americans are reluctant to open their wallets.

The retail industry has already significantly reduced the scale of temporary year-end employment compared to previous years. The NRF predicted that the number of seasonal workers hired temporarily this year will be between 345,000 and 445,000, about 40% less than the record high in 2021. U.S. employment information firm Challenger, Gray & Christmas reported that seasonal job postings this fall are at their lowest level in 10 years.