Writing business

The Week Ahead: Writing the Story of the Important Holiday Spending Season for Investors

At the beginning of his literary career, Charles Dickens was a journalist. Alas, he wasn’t a business journalist—that would have been too fitting for the son of an inmate in debtor’s prison.

Still, Dickens would appreciate the intrigue developing for the American consumer as the holiday spending season begins in the coming week.

Choose your favorite Dickens novel. This is probably a fitting theme for the coming weeks for buyers, investors and the economy.

A Tale of Two, uh, retailers. Both Walmart and Target released third-quarter results last week. Where Target warned of an increasingly frugal consumer and slowing sales, Walmart is attracting more price-conscious shoppers. The world’s largest retailer said three-quarters of its big boost in grocery sales came from households earning more than $100,000 a year browsing its food aisles. Target, meanwhile, has witnessed what it called a “precipitous decline” in shoppers’ appetite as the holiday season approaches.

High expectations are a good description of the holiday shopping forecast. The National Retail Federation thinks holiday sales will grow at nearly double their normal rate. Consumers took on a lot of debt, especially on their credit cards, as inflation dragged on and took hold of household budgets.

The ghost of Christmases past haunts this season. The past two years have seen shoppers run wild with spending, flushed with stimulus checks and pandemic savings. The present will be more subdued, but certainly not the forced economy of the Great Recession years. As this shopping season kicks off Friday into the week ahead, shoppers are in high spirits thanks to low unemployment, lower gas prices and rising wages. Still, persistent inflation will reduce the volume of holiday spending in the coming Christmas.

Dickens often asked his characters to navigate a world indifferent to their circumstances. That’s certainly true for investors too, as the story of the American consumer unfolds this holiday season.

Tom Hudson is a financial reporter and chief content officer at WAMU Public Radio in Washington, DC. Follow him on Twitter @HudsonsView.